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What’s Your Plan For Student Debt Management?

Struggling young professional applies for a student loan repayment

Student loans can be paradoxically crippling. Students enter into the contract assuming that once their coveted degree is in hand, hiring managers will be lining up for interviews, and fat paychecks will naturally cover the debt.

Unfortunately, that’s rarely the case.

Often, graduates are left with a load of debt and a job that’s “meh”. For that reason, students soon emerging from college need a plan in place for student debt management. Usually, that means figuring out how to lower monthly payments. After all, if you have an entry-level gig—the huge paycheck you may have expected has yet to come.

Pay the Piper

According to the Washington Post, 20% of borrowers with student loans default. This route wreaks havoc on credit scores—and bad credit scores make it even harder to land a reputable job. 20% is a scary statistic because these borrowers we’re talking about are academics (and are some of the most ambitious, hard-working people in the world). You may even be one of them. You can be the most industrious person in the world and still fall victim to a brutal debt ratio.

You Can Pay That Again

So what’s the solution? Lower your monthly payment so you can make ends meet without defaulting on your student loans or other bills. As you may know, lowering payments often means increasing interest over the life of your loans. The federal government offers a number of income-driven payment plans. Some of those choices available for lowering your monthly payment are:

  • IBR or “Income Based Repayment”
  • ICR or “Income Contingent Repayment”
  • PAYE or “Pay As You Earn”
  • REPAYE or “Revised Pay As You Earn”

If you qualify for one or more of these plans, your loan servicer can help you snag whichever plan offers you the lowest monthly payment amount.


Another thing you can do to lower that monthly student loan payment is refinance (or consolidate). This option can simplify things as refinancing rolls your payments into one monthly installment. Sometimes, you can even get a lower interest rate to boot. If this sounds too good to be true, consider the drawbacks of refinancing student debt:

  • You may lose the borrower benefits that came with the original contracts you entered.
  • A lower interest rate sounds great. However, if you double (or even triple) the life of your loan—you may be facing more interest paid over time.
  • You can lose some borrowers’ rights, especially if you consolidate from federal loans into a private contract.
  • If you don’t already have good credit, then you may not be able to score that advantageous new interest rate.

If all the options have your head swimming, you’re not alone. The number of plans available and the eligibility requirements for each are enough to have any borrower confused. In fact, that’s why most borrowers who become non-payers default – there are too many options, so they do nothing. Don’t fall into that trap. CESI can help you make sense of the options. Why spend hours scouring the information to find what’s relevant to you? We offer a simple DIY tool that provides a customized Federal Student Debt Analysis and information about your options. Contact us today!

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