Deferment will not clear the debt - it will only help the consumer take a breather from the monthly payments.
Miami, FL (PRWEB) July 01, 2013
National Debt Relief, recently hailed by TopConsumerReviews.com as the number one debt settlement company, tackles student loans in a recently published article. Posted on their website last June 15, “What To Do About Those Student Loan Debts You Can’t Afford” enumerated various options for those who are struggling with this type of debt.
Student loans continue to be a problem across all generations. New graduates are desperately trying to get a job despite the unemployment rate just so they can afford the student loan bills that will come in 6 months after their graduation. Pre-retirees are still burdened with the student debt that they took out in the 70’s and are in danger of carrying it into retirement. This scenario is what pushed National Debt Relief to divulge the different options to pay off high student debts.
One option cited by the article is to get the loan deferred. The article is quick to clarify that deferment will not clear the debt - it will only help the consumer take a breather from the monthly payments. A subsidized loan will not incur interest during this period but if it is not subsidized, it will continue to grow interest. The article also explains that “any interest not paid during a deferment is ‘capitalized,’ which means it will be added to your balance and you will eventually pay interest on it.”
Of course, there is the issue of qualifying for that deferment. The consumer has to either go to grad school, is currently unemployed or experiencing a financial hardship. Those who join the military can also apply for a deferment.
The article provides another option in case the consumer is not qualified for a deferment. It is known as forbearance. This means the consumer is allowed to skip their payments up to a year. This also has a list of qualifications like being ill or in a financial crisis. The consumer has to show proof of this. Mandatory forbearances can also take effect if the consumers is involved in a national service position, internship (dental and medical), or a teaching position. Unlike in a deferment, the article explains that a forbearance will incur interest regardless if the loan is subsidized or not.
There are also payment options that consumers can apply for that will help make monthly payments more affordable. One is known as the IBR or Income-based Repayment. It simply means that the consumer’s monthly contributions will be 15% of the discretionary income - which is the cap. Those who just graduated can avail of the PAYE or Pay As You Earn program that has a cap of 10%. Unemployed consumers may be given a reprieve from monthly payments. There is also the possibility that after 10, 20 or 25 years, the balance will be forgiven.
The article discussed the other type of payment method known as the ICR or Income-Contingent Repayment. This program will compute the monthly payments of the consumer based on their income, the size of their family and the debt amount. This program allows the forgiveness of any balance after 25 years.
In all these options, National Debt Relief advises consumers to think carefully and analyze their current financial situations before making a decision. They should consider the long term effects of their choice.
To read the whole article, visit National Debt Relief. Although the debt relief company cannot help with student loans directly, they can provide debt settlement assistance to the other unsecured debts of the consumer. To find out more about it, call 888-703-4948.