How biweekly student loan payments can help you in the long run.

Most student loans require monthly payments. That’s not to say that you can’t make payments more frequently than that; it just means that at the very least, you must pay off part of your balance once per month. So, what happens if you split those payments in half, and pay biweekly, instead?

On the surface, it’s easy to see that this would lower the overall interest you’re paying; once you’ve paid off half of that month’s balance, that money is no longer included when compounding the interest. While on a small, month by month scale, these differences in compounded interest don’t seem particularly significant, in the long run, they add up.

Moreover, there’s another reason to consider changing the way you repay your student loans. The way this all works out, if you are paying biweekly, this means that inevitably, two months out of the year, you will be making three payments rather than two. What does that mean? It means that you’ve effectively made 13 monthly payments in a span of 12 months. It will knock a bunch of time and interest off of your overall payment. So if you can manage it, switching to a biweekly payment plan could bring you huge long term returns.

Read more of the nitty gritty details here: http://www.dailyworth.com/posts/2767-a-simple-trick-to-get-out-of-student-loan-debt-faster

So, you’ve defaulted on your loans. Now what?

Let’s start off with the basics; most of what we’ve talked about so far has been advice on how not to default on loans. But inevitably, some of you will default. So, what do you do when that happens? Let’s start at the beginning.

1. What does it mean to default on a loan?

Defaulting just means that you have gone 270 days (9 months) without making any loan payments.

2. What happens when you default?

Well, for starters, it takes some of the more appealing repayment options off the table. That includes the ability to apply for deferment, forbearance, and in most cases, refinancing as well. It also means that the government can seize any and all of your tax returns, and that your credit score will fall dramatically.

3. How do you fix it?

Digging yourself out of default isn’t easy. But it is possible. Beginning on July 1, the government instituted a new program that allows borrowers to emerge from default on their federal student loans through 9 consecutive loan payments over the course of 10 months. These payments come out to 15% of a family’s adjusted gross income. The calculator with the algorithm can be found here: www.asa.org/repay/calculators/rehab/default.aspx

While the program is designed to make payments “reasonable and affordable” many participants are still complaining that they find the prices to be the opposite. This is still a very new program, and it obviously has some kinks that still need to be worked out, but it seems like a promising idea for people who have defaulted on their student loans and find themselves in serious financial trouble.

Read more here: http://www.columbian.com/news/2014/jul/25/new-plan-on-student-loans-helps-repayment/