With roughly 44 million borrowers that collectively owe nearly $1.7 trillion, student loans, the second-highest consumer debt category, has become something that’s pervasive for young people in the United States. We dedicated this episode to exploring some of the ways borrowers can make their student loan repayment manageable. Throughout the episode, Grant dives into how the interest rates and other characteristics vary depending on the lender, repayment options, income-based repayment, federal student loan forgiveness, and more. Stay tuned until the end of the episode, where Grant shares some strategies to reduce your monthly payments by suppressing your adjusted gross income.
Show Notes
[01:43] Background – The pervasive nature of the U.S. student loan programs and why they have become pervasive.
[05:10] Who Lent You the Money – Grant explains how the interest rates and repayment options may vary depending on the institution that is underwriting a student loan.
[07:38] Repayment & Refinancing – Once students have graduated and their forbearance period has finished, it’s time to paying back the student loans. Grant explores some of the options available for students at this point and how to decide whether to refinance with a private lender.
[10:19] Staying in the Federal System – Although it might make sense in some cases to refinance with a private lender, staying in the federal system has its own benefits. We talk about what these benefits are and how students can take advantage of staying in the federal system.
[13:07] Income-based Repayment – How the income-based repayment programs work, requirements for eligibility, and how they help people make their monthly payments manageable.
[18:13] Forgiveness – One of the features in income based-repayment is being able to get your debt forgiven after a certain number of years. Grant dives deep into how debt forgiveness works, how taxation comes into play at the point when the debt is forgiven, and what to consider when deciding whether to pursue forgiveness.
[22:32] Administrative Forbearance – As a part of the stimulus package introduced under the CARES Act, an additional forbearance period was introduced for student loans. Grant shares his thoughts on how to take this into consideration when making decisions about student loan repayment.
[27:15] Strategy for the Federal System – Grant shares some strategies for those who are in the federal system to make loan payments manageable by suppressing their adjusted gross income.
Resources
Episode #34: Why College Is So Expensive & How to Pay For It With Robert Farrington: