Friday, October 27, 2017

Four Tips for Budding Entrepreneurs To Manage Student Loan Debt by Tisa Silver Canady

Concerned about student loans blocking you from building a business? Student loan debt does not have to be a dealbreaker. Every individual is different but here are four general tips to consider when you need to manage student loan debt and you want to build a business.

1. Stay current - It is critical for you to remain up to date with your payments. Student loan payments are reported to credit bureaus and late or missed payments will have a negative impact on your credit score. Poor credit will subject you to higher interest rates or flat out rejection when applying for other loans. High interest debt will rob you of cash you could be pumping into your business. Staying current is a tip that applies to any debt but it is important to remember that federal student loans are not just any debt. The penalties for going into default are far-reaching, including seizing your tax refund and federal benefit payments, and having your wages garnished.

2. Consider consolidation – Consolidation is the process of combining at least two existing loans to create one new loan for the same amount. If recordkeeping is not your strong suit, then it may help to have one loan with one servicer and one bill to pay as opposed to having multiple loans with different servicers and separate monthly bills. Federal student loan consolidation is free. You can explore the process and complete the application online for free via Note: Federal consolidation loans often offer a longer repayment term. If you pick a longer term, you will pay more interest in the long-run. Paying extra each month can shorten your repayment term and lessen the amount of interest you pay overall.

3. Income Based Repayment – Income-based repayment plans allow you to pay based on how much you earn instead of how much you owe. This kind of flexibility may be particularly useful if you are in the process of building a business and have unstable income.  Contact your loan servicer to find out which income-based plan(s) you may be eligible for. You can estimate payments here: Repayment Estimator.

4. Search for forgiveness – There are several opportunities for student loan forgiveness, typically based on work in exchange for cancellation of debt or repayment assistance. Federal forgiveness options include Public Service Loan ForgivenessTeacher Loan Forgiveness and Perkins Loan Cancellation.  State higher education governing bodies may offer loan repayment assistance for residents who work in certain fields. Lastly, check with your employer to find out if student loan repayment assistance is offered. Keep in mind that cancelled debts and repayment assistance may have tax implications if they are treated as taxable income.

When it comes to managing your debt, do not be discouraged. Be deliberate! Get familiar with your debt, develop a personal repayment strategy and work toward finding the balance between meeting your obligations and building your business.

To find out more about Tisa Silver Canady, visit her at:

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