Student debt has been consistently growing over the last decade, becoming one of the largest barriers to becoming debt-free and saving. There are now services, however, designed to address student loan debt in a reasonable and methodical way.
Background on student debt laws
The federal government and banks have been fighting it out over the last four or five years trying to figure out how to fund (and make money) off of student loans.
In 2007 a major change in the law took place that made it less enticing for private banks to consolidate student loans – this is why you are not getting monthly or weekly calls from consolidators anymore.
So while banks aren’t as interested as they used to be in reducing loan debt, people with large student loan debt still need a way to reduce their debt load and monthly payments. In the absence of bank support, there are services designed to help with student loan debt.
Student debt assessment
The first step is getting an objective assessment of your student debt. The assessment should include the following:
- A snapshot of your student loan history
- An overview of specific repayment strategies
- An estimation of potential savings from applicable federal student debt relief programs, such as Income-Based Repayment and Public Service Loan Forgiveness.
For this type of assessment we recommend GL Advisor. This assessment is good, and importantly, free.
The next steps for managing student loan debt
Once you’ve figured out where you stand with respect to your specific loans and debt situation, the next steps are typically:
- Reduce the overall cost of your student loan debt. This can be through consolidation, through loan forgiveness options or through debt relief programs.
- Increase the amount you are saving each month.
- Restructure your debt to get a lower monthly loan payment.
- Position yourself for loan forgiveness.
After reviewing your free assessment, you will have the option to retain GL Advisor, or other similar provider, for a service fee on an annual basis to help implement your integrated financial plan, manage your qualification for federal programs, execute time-sensitive repayment strategies and prepare your federal and state tax returns.