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It looks like there will be an increase in student loan rates this coming July, The Huffington Post reports. If there is no action by Congress before June 30, the rates are likely to double.
Under a bill passed in 2007, interest rates on student loans were shaved from 6.8% to 3.4%. While it has since then been extended, that extension is about to expiration at end of June of this year. This means that the rates will revert back from 3.4% to 6.8%.
So, before the commencing of many a celebratory graduation this year, next year, and the years to come, it may be helpful to consider a few options to ensure that you and your child's financial situation is as painless as it can be.
Loan deferments are available in certain situations that will then allow the students to be excused from their loans for the time being, deferring them to a later point in time. The upside to this is that in some cases, the interest-rate can be frozen, helping you from incurring even more debt.
Usually, there are a number of conditions that you need to have in order to qualify. They usually include considerations like death, disability, extreme financial hardship, and continuing school, to name a few.
Loan consolidation is another option with benefits, according to a report from U.S. News. Consolidating loans allows you to combine them together and extends your repayment period. However, one factor to keep in mind is the possibility of paying more interest over time.
It is still a good option for those who have high loans, but an income that doesn't quality you for deferment.
If you are able to pay off your student loans currently, but just not at the rate they require you to, income-based repayment option might be a good option to consider. Income-based repayment is exactly what it sounds like -- it calculates your repayment rate according to your current income. Usually, proof of your salary or financial situation is required.
To learn more about avoiding default and other options available to you, you can also download our free Guide to Student Loan Debt.