Your entrepreneurial dreams don’t have to be derailed because of student loans. You can still start the business you’ve always wanted and deal with your student loans at the same time. You might need to use a student loan advisor to help you organize your debt and discover different repayment plans, but there are ways for you to pay off your student loans and get on the path toward achieving your dreams.
Student Loan Forgiveness
For students with federal loans, there may be a way for you to get rid of that debt altogether. This year, the federal government announced a plan to forgive up to $10,000 of federal student debt. Pell grant recipients may be eligible for up to an additional $10,000 in loan forgiveness. The criteria for eligibility are nuanced, so if you think you might have some loans that qualify for forgiveness, contact a student loan consultant to help you verify this fact and get your paperwork in order.
Unfortunately, there may be some federal loans that don’t qualify for forgiveness, but this doesn’t mean you can’t pursue your entrepreneurial dreams. The federal government offers income-based repayment plans that cap your monthly student loan payments to a percentage of your income. This means that if your company doesn’t make a lot of money when you first start it, you won’t have to make huge student loan payments.
Your student loan payment could be as low as $0 per month, depending on your income. Of course, as your company starts to make money, your payments will increase accordingly. You will need to prove your income yearly to have your payments adjusted, but this will help you keep your payments affordable while you’re getting your company off the ground. There may also be a time when your balance may be forgiven if you make enough on-time payments, so keep that in mind as well.
Since private student loans don’t qualify for either the federal forgiveness program or the income-based repayment program, you’ll have to look for other solutions if you obtained your loans through private lenders. The main method for getting lower payments on a private student loan is refinancing.
This is only a good idea if the current interest rates on loans is lower than what it was when you obtained your loan, or if you’re going to refinance for a longer term. These are the only two options that will lower your monthly payments. Be aware that if you decide to refinance your student loan to have a longer repayment term, you will probably pay more interest over the entire term. But, this doesn’t mean you can’t refinance again later to get that term shortened once your company starts making money.
You have quite a few options for managing your student loans while starting your own business, especially if you have federal student loans. Understanding your options can be complex, though, so seeking out the guidance of an expert can help you get into the best position possible for your individual situation.