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(HealthNewsDigest.com) – Today, most people understand that wellness includes financial fitness. Yet society’s young adults often are starting out their working lives in a state of financial unhealthiness. On average, college graduates leave college with more than $20,000 in student loan debt. Many graduates also accumulate significant credit card debt while they are in school. It’s a wise idea to plan a healthy educational debt strategy while you are in school so that debt will not cripple you post-graduation.
1. Pay on time. The most important thing is to pay all bills on time. On-time payments are the No. 1 way to save your credit rating – and save money on finance charges.
2. Avoid credit card debt and pay it off quickly. The new CARD Act aims to minimize the presence of credit card lenders on campuses and require co-signers for those under 21 to get a credit card. Don’t skirt these rules. If you do have credit card debt, work diligently to pay it off. Because credit card debts typically carry such high interest rates (typically 15-30 percent), there is no better investment than paying this debt as quickly as possible.
3. Don’t borrow more than you need. Calculate your need carefully, and borrow only what you need.
4. Take tax benefits. Most new graduates can deduct up to $2,500 per year in student loan interest payments. The deduction phases out for taxpayers with annual incomes between $50,000 and $65,000 ($100,000 to $130,000 for those filing joint returns). Ask a tax advisor to check your tax return to be sure you get all the education-related deductions and credits for which you qualify.
5. Service can pay off loans. If a service career appeals to you, look into nonprofit organizations that offer loan repayment as one of their perks. AmeriCorps workers can receive $4,725 to be used toward student loan repayment, in addition to a small stipend. Peace Corps volunteers, who serve two-year terms, may be able to defer Stafford, Perkins and consolidation loans and qualify to cancel 15 percent of each Perkins Loan per year of service, up to 70 percent in total. Volunteers in Service to America (VISTA) offers $4,725 to be used toward repaying student loans.
6. Some military service members can receive loan help. Graduates who serve in the Army National Guard may be eligible for the Student Loan Repayment Program, which offers up to $10,000 to repay loans. Federal loan repayment programs also exist for service members in “areas of hostilities or imminent danger.”
7. Teachers in high-risk schools might be eligible for loan cancellation. A new program allows new teachers in at-risk schools to cancel up to $4,000 of student loans for each of four years with TEACH grants. Several additional federal, state and other programs also exist.
8. Lawyers and doctors can earn loan forgiveness for public service. Many programs repay student loans for graduates in law or medicine (including veterinary medicine, nursing and physical and occupational therapy) who serve in public-interest or nonprofit positions, or in underserved areas. For more information, contact your professional association or search the Internet for your field.
9. If you can’t pay. If you truly cannot pay your loan, immediately call your lender. Lenders would rather work with you than risk a defaulted loan. You will do less harm to your credit rating if you work out an arrangement to postpone payments for a while than if you default.
Education generally is a worthwhile investment. It provides a strong foundation for better earnings and a satisfying career. Take advantage of the available resources to keep the cost you pay for your education manageable.
Andrew Housser is the CEO of Freedom Debt Relief, LLC, one of the nation’s largest debt settlement firms. Working for the consumer to negotiate with creditors and lower principal balances due, the company has served more than 80,000 clients since 2002. Freedom Debt Relief is a wholly owned subsidiary of Freedom Financial Network, LLC (FFN).
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