A study by CampusBooks.com, a textbook price comparison website, found that 56% of students at four-year institutions carry some form of student debt, and that eight in 10 college students are concerned about repaying their student loans.
In addition to the financial stress those loans bring and the stresses that come with keeping their grades up, the report found that 66% of students work either full or part-time during school.
BE.com spoke to Josuweit, who told us about the steps people can take to make the repayment process easier and more efficient.
BE.com: What prompted you to start Student Loan Hero?
Josuweit: I learned from my own experience how difficult it was to keep track of your loans and understand how they worked, who held them, etc. I wanted people to have one place where they could track all of their information and understand their options. The average person has eight loans that are a mix of federal and private. When the information is scattered, it’s hard to understand things like their overall debt level and interest rates, but that’s where you have to begin.
BE.com: Sometimes, people get so overwhelmed by their debt levels, that they often feel like they don’t have options. What do you tell them?
Josuweit: There are over 70 repayment options for student loans, but they’re complicated for borrowers to figure out. When it comes to private loans, borrowers should explore refinancing and make sure that they are getting the lowest possible rate.
Lending institutions will also allow students to defer payments if they are in trouble. Federal loans can get deferred for three years, and private loans can generally get deferred for six to 12 months. You have to sit down and figure out your options. There is no reason for the high level of default on student loan debt.
BE.com: Could you please elaborate on what you mean when you say that there is no reason for high default levels, after considering the fact that people are struggling with student loan debt and struggling to make ends meet?
Josuweit: You can get income-based repayment plans for federal loans, if the loan represents a significant portion of your income. This can greatly reduce or eliminate your payment.
Federal loans are also eligible for different loan forgiveness programs. Borrowers have to do a little research, and these programs need to do a better job of getting the word out. I’m always surprised by how few people take advantage of these options.
With student loan debt topping $1 trillion, it is imperative that we educate students—young and old—about alternative solutions to their debt burden.