Answers to common questions about student loans
Updated on December 7, 2020
Most people have more questions than answers regarding student loans. Some tend to search Google to get the answers they need, but the information available may not be exhaustive. Here are answers to some of the common questions about student loans resulting from Google Trends and Google autocomplete.
How do I consolidate student loans?
The decision to consolidate a student loan allows you to access a new loan, which you can use to pay off other student loans. Two options are available for those planning to refinance student debt, and these are refinancing through a private lender and getting a new federal loan through a Direct Consolidation Loan.
In the case of private student loan consolidation, you need to apply directly with the private lender. Your income and credit, among other factors, will dictate the approval of such a loan.
On the other hand, consolidation of federal student loans is only possible through the Direct Consolidation Loan, which uses an average interest rate. Note that this option can deny you the savings you expect to realize.
Additionally, you need to ensure that you do not need the special protections that federal loans attract. Otherwise, you risk losing access to such protections when you refinance your student loan.
Is it possible to deduct student loan interest?
The interest on student loans is a tax-deductible expense. If you want to write off your student loan interest, you can reduce your taxable income by up to $2,500 according to the current tax laws.
You also need to have a qualified student loan that caters to education expenses only. Meeting income, among other requirements, is also paramount before claiming a student loan tax deduction.
Is getting student loans out of default possible?
When more than 270 days elapse before you make your student loan payments, that becomes a default. If you are considering getting a student loan out of default, a few options are available for you to pursue.
For instance, you can rehabilitate or consolidate your student loan, which kicks off the process of getting the loan out of default, or you can consider full repayment of the loan.
Getting answers to all your student loan questions is critical because it will help you make well-informed decisions. That way, you will avoid making unnecessary mistakes, and you will also realize savings in one way or another.