PITTSBURGH (KDKA) — Going to college is great, but having to pay off student loans for years is not.
Many families now see their college graduates struggling to live and repay their loans.
There are private student loans and government student loans.
If the money you borrowed for school is from a private lender, your only option is to turn to that lender for help if you are having trouble paying.
“If you have a federal loan, there are a number of ways you can repay that loan,” says CBS News senior business analyst Jill Schlesinger.
For anyone hoping all the loan forgiveness talk will get you off the hook, Schlesinger says she wouldn’t count on it, but if it did, it would be great news.
“The government tries to provide some flexibility depending on your situation after you graduate,” Schlesinger added.
Schlesinger says the biggest problem graduates face is that they don’t make as much money in the workplace as they hoped.
When asked if individuals could qualify for an income-based repayment plan, Scheslinger replied, “Yes, your payment will decrease on a monthly basis, but you will add many years to this loan.”
Schlesinger says being on an automatic payment system is a must. “You should be on autopay so you never miss a payment,” she said.
Government and private lenders offer an interest rate reduction of 0.25% if you accept automatic payment. Over time, this could mean saving hundreds of dollars.
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Schlesinger also says there needs to be a tough discussion about the reality of love as it relates to the amount of money borrowed.
“Before they start talking about loans, families should have conversations about how much they can afford starting in their freshman year of high school,” Schlesinger said.
Schlesinger says a general rule is not to borrow more than they think they will earn in their first year of employment.
“We encourage people to have candid conversations with their children about their financial means to do this,” Schlesinger said of borrowing planning.
Schlesinger finally says parents need to protect their own futures before they start co-signing college loans for their kids. Otherwise, the parents run out of money and the graduate ends up supporting the parent.