Ready to start your own business? Your student loans may be standing your way! Not only startups but entrepreneurship is also getting affected by high student loan debt in the US.
Student loan is one of the largest forms of debt. Many borrowers are struggling to keep up with their monthly payments. According to a recent study from Bentley University, approximately 66 percentage of Millennials hoped to start their own business in 2014. Unfortunately, that dream haven’t been fulfilled yet. The student loan statistics also concluded that 1.3 million students graduate from college with debts. These loans leave them with with scarce discretionary income to build and launch a brand new business idea.
Here are some tips that will help you to build your business if you are struggling with these loans:
1. Investigate income-driven repayment programs.
If you want to reduce your amount of money that you pay towards your student loan each month, then some income-driven repayment programs will surely help you. These programs may vary and they calculate your new payments based on “discretionary income”. If your income is low, your monthly payment may be low or nonexistent under one of these plans. But you will have to check and investigate it at the first place.
2. Extend your repayment period.
Apart from income-driven repayment programs, you can also extend the time period in which you have to pay back the loans. But by increasing the time period or paying through income-driven repayment you will end up paying more money because that will result to a increased interest over time.
3. Do not stop working, even if you have launched your business.
You need to make a smart choice. If you want to keep up with your student loan payments and bankroll your new startup , do not quit your full time job. This will ensure your job-security as well as the more money you will save , the more you can invest in your new business. Act wisely!
4. Delve into refinancing.
You can examine and then go for refinancing, if you have very high interest rates. It is usually beneficial for those borrowers who have solid credit and income history who can benefit from lower rates and better terms. Do not forget to investigate first!
5. Consider deferment as the last option.
You can even make a bigger chaos at the time of making the payments again, if you do not keep this as the last option. You can apply for student loan deferment and forbearance which will allow to not to make payments for a period of time. If you need finances to start your business then you can stop paying for a while, but later on you will have to cope up with even bigger balance.
This may not be a cake-walk but nothing worth having comes easy!