As you may have noticed, in recent days, there have been numerous news stories highlighting the negative aspects of student loan debt.
Student loans have consistently made national headlines, with stories that have highlighted their overwhelmingly complex nature, government attempts at reforming them and wildly complicated repayment terms.
Although the student loan industry is in dire need of improvement, student loans actually have many characteristics that are quite positive – but they seem to have been overlooked on a national scale.
In light of the coming holiday of Thanksgiving – and upstream from popular opinion – I’d like to highlight the positive aspects of student loans, for the benefit of borrowers, their families and our collective sanity.
Here are 10 reasons to give thanks for federal student loans.
#1 You don’t have to pay them back right away.
A student loan is a very unique type of loan that allows you to defer your payments for at least 4 years, or at least until your schooling is done. This is an exceptionally generous feature, and can be a very helpful benefit for a borrower who has just finished school and may be in the process of figuring out her or his next steps career-wise, and in life.
#2 You have a bunch of repayment assistance options.
Once they are finished with school, federal student loan borrowers have access to forbearance, income-driven repayment plans, interest only payments and other deferment types such as Unemployment Deferment or Economic Hardship Deferment. Credit card and mortgage lenders extend no such flexibility in their repayment terms.
#3 Your credit score was not a determining factor.
To receive your loan, you did not need to have a certain credit score, or meet any other set financial metric. The only real requirement was that you were in need of a student loan, based on your and/or your parent’s financial circumstances.
The exact opposite is true when it comes to receiving most car liens and mortgages, as they have some pretty stringent requirements about qualifying for their funding.
#4 You might be able to have it forgiven.
Even if you do not qualify for one of the many forgiveness programs available, at least they exist. There are nurse forgiveness programs, teacher forgiveness programs and Public Student Loan Forgiveness for non-profits and government agencies. In addition, there are at least sixty other little-known loan forgiveness programs in existence today.
#5 You can lower your payment based on your income.
There are at least six ways to lower your payment, according to how much money you make, including Pay As You Earn, Income Based Repayment Plan, Income Sensitive Repayment Plan, Income Contingent Repayment Plan and Economic Hardship forbearance. There are also Interest Only Repayment Plans, which are subject to your lender or servicer’s discretion.
#6 There are over a dozen different types of deferments and 3 types of forbearances.
If going through a temporary financial hardship, federal student loan borrowers have the ability to delay their payments for a certain period of time. One of these types of forbearances does not even require providing supporting documentation.
#7 Consolidation.
Consolidation has the potential to do more than just combine all your loans into one. It can lower your payment, qualify you for forgiveness programs that the loans otherwise did not qualify for and potentially extend your forbearance options.
Please note, consolidation is not a “fix all” solution. It is highly recommendable to consult with a student loan industry professional (or several) before making this financial commitment.
#8 Federal student loan lenders have a more forgiving policy towards delinquency and default (including loan rehabilitation).
While a typical consumer loan defaults after 4 months, or 120 days, of not making payments, a federal student loan defaults after a whopping 270 days, or 9 months, of not making payments.
Also, if the loan does default after 9 months, you have the exceptional opportunity to rehabilitate the loan back into good standing by making 9 consecutive, on-time payments, based on your income. The U.S. Department of Education will even retroactively fix your credit if you complete the rehabilitation program – an oustandingly positive aspect of federal student loans.
#9 You can get a portion of your loan interest paid for (a.k.a. subsidized) by the federal government.
If you have subsidized federal loans, all of your interest was waived while you were in school. Additionally, interest is also waived during all types of deferments for subsidized federal student loans.
Unpaid interest is also waived on the subsidized portions of federal loans for the first 3 years on several of the income-driven repayment programs.
#10 These loans afforded you the ability to invest in your future.
If looked at in a positive light, student loans gave you the opportunity to invest in your future, in the form of higher education. Hopefully, this investment prepared you for a fruitful career of your choosing – and at the very least, they’ve improved your quality of life.
#11 Delinquency never disqualifies you from any form of repayment assistance.
A bonus reason to give thanks for student loans: even if you’re past due on your payments, you can still find ways to receive help with your student loan payments. The old adage, “better late than never,” certainly applies when it comes to student debt repayment.
Undoubtedly, the student loan industry is far from perfect. But while the media focuses relentlessly on what can go wrong with student loans, borrowers can take the road less traveled and focus on what can go right.
By arming themselves with the positive features of this type of debt, and a positive attitude to match, borrowers can forge a plan of attack for their student debt repayment – one that can work in congruence with their current life circumstances, budget and next steps in life.
Ultimately, the attitude you have about your student debt will influence how positive, or negative, your debt repayment experience will be. As Charles Swindoll put it, “Attitude… is more important than facts. It is more important than the past, the education, the money, than circumstances… We cannot change our past… the only thing we can do is play on the one string we have, and that is our attitude. […] Life is 10% what happens to me and 90% of how I react to it. And so it is with you.”