What life changing events can impact student loans repayment? For most people who have student loans, they will have significant changes in their life during their student loan repayment process. These life changing events will impact the way you should structure your repayment plan. Understanding the interaction of your income, marital status, major purchases and employment will all impact your financial decision.
As you work through your analysis understanding the various repayment options is important. Today personal planning has become very short term in focus. We often overlook the long term impact of our decisions. Some of you have already seen the outcome of your decisions by being surprised with the amount of student debt you have incurred. The college financial process only looks at your situation on a one year basis. Students and families don’t realize the cumulative impact of these annual decisions until graduation or the student stops going to school. Our new college funding software, EFC PLUS can help you through this analysis by bringing a more comprehensive view of paying for college.
If you properly analyze your numbers you will have a variety of repayment options. The monthly payment could vary greatly between each option. Here is where you need to select the best option for your current situation. At the same time understand the flexibility in that decision as your life will change. Some of these risks you may not even know at the time include your future spouse’s income and debt. Understanding your options before making the decision and knowing your flexibility is critical.
Things to consider for your student loan repayment as life changes include:
- Income Growth
- Current and future cash flow
- Other current debt
- Qualifying for Loan Forgiveness
- Working in the Private or Non-Profit environment
- Marital and Tax filing Status
- Future Purchase of larger items (Car or Home)
- Debt level of spouse
- Employee Benefit selection
For parents, you may face other issues if you have taken on education debt. Your repayment options may be limited if you may be planning for retirement or need funds for an elderly parent. Understanding your cost of money and financing options will be very important in your planning. This planning is very different than the students.
A hidden risk for some parent is being the co-signer on a student loan. This is often not discussed or identified as a risk. If you have co-signed for a loan understanding the best ways to protect yourself should be addressed in your repayment process.
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