Student loan and debt elimination

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Student loan and debt elimination
A crucial point to be borne in mind by students is this: student loans cannot be eliminated under any circumstances. Student loans are not grants; they are just financial assistances to cover education costs and they have to be repaid under any circumstances once the education is over. Even filing for bankruptcy does not work in this case. It is just too long a process to be worth the effort.

After graduation, students have about a six-month grace period before they start repaying their loans. This is the period to think about how to repay the loans and which debt management program to implement. Students must ideally take up a job immediately after their educations so that they have a proper headway when the grace period comes to an end and the loan repayment begins.

The most that a student can do towards debt elimination is to enroll in some voluntary work, such as those at AmeriCorps or PeaceCorps. They may also enroll in the armed forces or serve as assistant doctors (if they are students of medicine) or teachers or some other socially relevant job. However, a true economist would not call this as complete loan elimination as the student has to put in some years of work. These years, if worked elsewhere, could have been more monetarily productive. Hence, these loan forgiveness methods cannot be branded as loan elimination.

Wise management of loans is also a method to ease the burden of loans. Students can consolidate all the loans taken during their education into a single bulk and start repaying them at a single interest rate. This process also locks the interest at the current rate. Yet, the student still has to make repayment. The benefit is of having to deal with a single creditor rather than several.

Filing for bankruptcy is a very tedious process. Students are given bankruptcy status only if it is well proven that the student will not have even a decent standard of living were the loan repayment to continue. Students who meet with accidents and become physically redundant in some or the other way can be given bankruptcy status and their loans may be eliminated. However, for a regular student to shirk repaying loans by filing for bankruptcy is just wishful thinking.

There are several sites online that claim they can eliminate student loans. But students must be intelligent enough to read the fine print. Within those lines it is explained, though not clearly, that loans cannot be eliminated. There are, of course, negotiations that an agency can hold with the creditors on behalf of the students to get the interest rates reduced. But this is actually a worthless exercise as the student has to build up an escrow account even before the negotiations may begin. Also, there are the payments to the intermediary agency that have to be done by the student. Thus, a student must abandon hopes of getting loans totally eliminated out of the blue and begin preparing strategies to repay them as soon as possible.

Student Loan Debt provides detailed information about student loan debt, student loan debt consolidation and more. Student Loan Debt is affiliated with Debt Consolidation Loan Online.

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Student loan and debt negotiation

During a negotiation, two or more parties discuss certain mutually satisfactory conditions to resolve a certain issue. Students can also negotiate with their lenders about loans that they find difficulty in repaying. Loan negotiations cannot result in complete elimination of the loan, but the student may get a reduction in the rate of interest or longer tenure of repayment or some other such concession.

Debt negotiations are best done by a third, mutually neutral party. There are negotiating agencies that study the case of the student who has taken the loan and then discuss with the lenders, trying to get as much benefit as possible for the student. Negotiators work on behalf of both the lender and the borrower and a successful negotiation is one in which both the parties are satisfied with the agreed conditions.

Usually, when a student decides to enter into negotiations, there are already stalled payments. But the very act of entering into a negotiation indicates that the student is willing to repay some of the debt. However, a student must resort to negotiation only as a last measure. Lending agencies have no wish to enter into negotiations, as there is no logical reason for them to settle for anything less than what is due to them.

Debt negotiators do not come cheap. The biggest qualification of a debt negotiator is that they carry some clout and are experienced in matters of loan financing. Most debt negotiators charge their fees upfront, or at least 60% in advance. This is a huge setback for student borrowers who are already deep in debt and in fact, defeats the entire purpose of negotiation. Negotiators are not very transparent in their dealings and let the student debtors know only what they need to know. These are dangerous issues and there may be unsettled dues towards the negotiators even after the debt has been long settled.

Students can perform their negotiations themselves, thus eliminating the need of negotiators. A negotiating agency won't do much more than what the students can do themselves. If there was a guarantor involved during the processing of the loan (which is now obligatory under Federal Family Education Loan Programs), then debt negotiations become simpler. Students can negotiate on any loan amount, but the decision of acceding to the negotiations lies in the hands of the lenders.

Student Loan Debt provides detailed information about student loan debt, student loan debt consolidation and more. Student Loan Debt is affiliated with Debt Consolidation Loan Online.


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Student loan and debt elimination
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