If you’re experiencing financial difficulty, student loan payments can feel like a weight on your chest. Thankfully, there might be help on the way. In response to the squeeze the ailing economy has put on the middle class, President Obama announced initiatives to help alleviate the pain. The Task Force on the Middle Class, appointed by President Obama when he first took office, came up with several recommendations. In addition to proposals to assist families with rising childcare costs and help those caring for elderly relatives, is a change that could help borrowers coping with crippling student loan debt.
The Task Force has proposed that payments on federal student loans are never more than 10% of one’s income. Currently, under The College Cost Reduction and Access Act of 2007, the cap is set at 15%. This is a welcome change, considering that the average student loan debt for graduates from a four-year undergraduate program was $27,803 for the 2007-2008 school year (the most recent figures to date), according to the National Postsecondary Student Aid Study.
This is a great plan, but what if you’re having trouble making payments right now? Here are three tips to help you get back on track with your student loan payments:
Ask for help. Let your lender know as soon as you feel you might have trouble with your monthly payments. Don’t wait for the problem to get out of hand. Immediately let your lender know that you’re facing financial difficulty. If this describes you, stop reading this blog and call your lender. Now.
Work out a plan. Once you’ve contacted your lender and established that you’re having trouble with payments, ask for a plan to help you get back on track. An economic hardship deferment or forbearance will temporarily place your payments on hold. Another option is the extended repayment plan, which would stretch out your payments and lower your bill.
Seek long-term solutions. If your problem is bigger than briefly falling on tough times or losing your job, and you have issues with day-to-day money management, it’s time to call in the professionals. The National Foundation for Credit Counseling (www.nfcc.org) can help you with basic budgeting and managing your cash. You might also consider meeting with a financial planner to help you map out a plan.
For more advice on managing your money, go to Credit and Debt Management under the tab labeled Personal Finance.
Sheiresa McRae is the consumer affairs editor at Black Enterprise.