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Finding help with your student loans

Drowning in student loan debt? Here's where to find (totally free) help.

By MSN Money Partner Jul 23, 2014 12:13PM

This post comes from Maryalene LaPonsie at partner site Money Talks News.

Money Talks News on MSN MoneyIn their pursuit of higher education, Americans have racked up more than $1 trillion in student loan debt. While some may debate whether this amount represents a crisis, it may certainly be a problem for you personally if you have loans you can't pay off.

Not paying off your loans simply isn't an option. However, there are ways to reduce your payments or even wipe out your debt.

Government options for reducing student loans

Before we talk about the private companies professing to help you wipe out student loan debt, let's start with the official debt relief options offered by the government.

Despite conventional wisdom to the contrary, the government isn't entirely heartless. It does offer ways to defer, consolidate or even forgive certain student loans. The catch is you have to have loans through the government -- private loans aren't eligible -- and you may have to commit yourself to a career in public service.

Here's what you can get through the government:

Deferment or forbearance. If you're having trouble making payments, your first course of action should be to contact your loan servicer to ask for a deferment or forbearance. While the details differ slightly, both work by suspending your payments for a period of time.

Deferments can last longer, and the government may even pay your interest during that time. However, you typically need to be unemployed, in the military or in school to get one. Forbearances can be mandatory or discretionary, and discretionary forbearances include the catch-all category of "financial hardship" as a reason for eligibility.

Fifteen years ago when I was pregnant with our oldest child and money was tight, getting a forbearance was as simple as calling and explaining the situation. Although I can't promise that of your request, you may be surprised at how easy it is to take a break from your payments.

Student in classroom © StockByte/PictureQuestLoan consolidation. Another option to reduce payments may be to consolidate your loans. If you have multiple government loans, you can apply, at no cost, for a consolidation loan. This turns your multiple loans and monthly payments into one loan and one (hopefully lower) payment amount.

However, be aware that while selecting a longer repayment term may lower your monthly payments, it could also increase the overall amount you're paying on your student loans.

Income-based repayment plans. The standard government repayment plan is 10 years, but that certainly isn't your only option. Other repayment plans go as long as 20, 25, or, in the case of consolidated loans, 30 years.

There are also several income-based repayment options:

  • Income-Based Repayment Plan.
  • Pay as You Earn Repayment Plan.
  • Income-Contingent Repayment Plan.
  • Income-Sensitive Repayment Plan.

These plans all have monthly payments tied to your income and can be ideal if you find yourself stuck in a low-wage job. For some programs, you may need a partial hardship to qualify, but after 20 to 25 years of repayment, any remaining debt is forgiven.

Student loan forgiveness programs. Finally, you may be able to have your loan forgiven if you're a teacher or work in a public service field. However, you need to have the right loans to make this work.

  • Public Service Loan Forgiveness. Only those with Direct Loans are eligible for this program, which forgives any remaining debt after 10 years of public service. To qualify, individuals must work for a government or qualifying nonprofit agency and make 120 full and on-time student loan payments while employed in the public service sector.
  • Stafford Loan Forgiveness Program for Teachers. The eligibility requirements for this program are a little more complex, but it boils down to you need to teach full time in a qualifying low-income school for five consecutive years. A similar forgiveness program is offered to those with Perkins Loans.

States might offer their own loan forgiveness programs to teachers, doctors and other professionals as well. You can learn more about federal forgiveness programs and government options on the U.S. Department of Education website. For other programs, check with your state higher education department or agency.

Using a third-party company

You can apply for all of the above programs yourself. It costs nothing and may be as simple as making a call or completing a form.

Still, some people find the process overwhelming and need a helping hand. Unfortunately, many for-profit companies are willing to provide it for an exorbitant price. They may charge hundreds of dollars to fill out the same simple forms you could complete and submit for free. Some may outright lie, and at least one state has sued two companies for fraud.

If you do feel so overwhelmed that it is worth it to pay a third-party to manage your student loan debt, be careful about which company you use. Check with the Better Business Bureau and search for online reviews. Above all, be wary of any company insisting you should stop paying your loans while it negotiates your debt. That is a surefire way to default on your loans and, trust us, you don't want to go there.

Third-party companies may also claim to help with private lenders. Again, there is really nothing they can do that you can't do yourself -- namely, refinance or try to negotiate a forbearance. Private loans offer little flexibility, which is why, if you haven’t taken out any loans yet, we recommend you stick to the federal loan programs.

Have you tried to reduce your student loan payments? What did you try and how did it work?

More from Money Talks News

Jul 23, 2014 1:46PM
None of these things actually help you pay off your debt. Deferments and Forbearance just put off payments for a while, but you're still racking up interest. It mentions how in some cases the government will pay that interest for you. Funny though, it doesn't tell us how to make that happen. I have government loans that are now consolidated, and I was able to get them deferred for the first year, and there was nothing said about the government paying my interest during that time. 

These aren't ways to help you pay off your debt. Just ways to help you 'manage' it. Or in other words, ways the government can squeeze as much money out of you as possible. Although my payments are affordable now, in no way is it 'helping' me by making me pay back more than twice what I borrowed. Oh well, it is what it is. 

The information in this article is also on every promissory note you have to sign.
Jul 23, 2014 4:05PM
I don't know why I keep clicking on these articles. I actually looked first to see if this was a new one but it still has the same information as every article before it. This information is not new and anyone who is trying to figure out their loans already has it. I really should have known there wouldn't be any new information here.
Jul 23, 2014 3:34PM


if you're a grad with federal-backed - sl debt there is no really long-term help with federal student loans to save the situation. you can consolidate you fdsl loans, which locks your loans into a one-time interest rate, higher than the current rate, and that can NEVER be re-negotiated under the contract. or you can arrange to make a lower payment based on your income. however, the lower monthly payment doesn't reduce your debt. and all the outstanding interest every month is added into your original loan amount, at the apr you've negotiated. in finance it's called 'capitalized interest.'  so basically you are digging a hole you won't ever get out of.  really, death and 100% disability under social security are the only ways to get your loans reduced. contrary to what many people think, personal bankruptcy will not dismiss your student loans under current federal law. (president reagan's administration stopped that way back when.)


i will say president obama has added a much more liberal forbearance program that gives you some breathing room, up to 2 years where the feds pay your loans in full every month if you're un-  or under- employed, and interest doesn't accumulate. but until good paying jobs become available, it's pretty iffy.

Jul 24, 2014 12:38PM

free?  Nothing is free.  if the govt forgives your loan than the taxpayer is paying for it.


I am sure that news will make taxpayers rejoice.

Jul 24, 2014 12:39PM

of course MSN tells people to go to the govt for help.  Why the govt?  Because MSN says "its free"



Jul 24, 2014 1:15PM
You eliminate your student loan just like any other loan, you pay it, You borrowed money to go to school, the plan is, you get a  job after you finish school and pay your loan off, pretty simply, So quit whinning and face the music 
Jul 24, 2014 4:47PM

All high schoolers and their parents should take note and avoid this dilemma.  Go where you can afford to go..... Start with junior college and transfer.  No need to come out of college with a small mortgage over your head. 


There's a reason that most undergraduate plans now take 5 years to complete versus the traditional 4 year cycle.   There's so much money in higher education the curriculum / schedules are rigged to make it go 5 years.  Just like a hotel, colleges need to keep their occupancy high.  If a college has 10,000 students @ $7,500 per year, the college pulls in an extra $75,000,000 for each cycle of freshman - graduation.  Some of the real big schools have 40,000 plus students so they would bring in an extra $300 million every 5 year cycle.

Do not play their game

Jul 24, 2014 1:09PM
I want help paying off me house. Suppose the govt. will help me too?
Jul 24, 2014 11:48AM
You eliminate your student loan debt the same way you eliminate any other debt from your life - start spending less money. I would start looking at insurance costs (car) as they are a real killer in this country. You don't need an expensive policy from a place like GEICO, those guys charge way too much and most likely you will just be supporting their TV ads. Get a basic policy for around $25/month (check Insurance Panda for this) and then pocket the rest... our even better - use it to pay off your student loan debt.... or whatever other debt u have.
Jul 24, 2014 11:23AM
Hang in there under 30 crowd, keep doing what you are going, borrowing money you don't have to give to the teachers unions at college. Keep listening too all their progressive Dumbocrat Kool-aid serving talking points. And soon you will be in line for the next major taxpayers bailout say around 2016. So just hang in there, stay the course and let someone else pay your bills.
Jul 25, 2014 3:03AM
Clearly these options are not working and we need to think out of the box. Solutions like SuccessFunding (Kick-starter for college education) have a huge opportunity to help us and other students. 
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