Today, most students have to take out loans to get through college. Even with the high price tag, many people think it's the best way to improve their salaries and college graduates consistently make more than non-graduates. This causes the price of college to continue to ​rise​ and there's less money to go around for everyone. You may not want to take out a student loan and avoid debt but, are there ways to avoid debt while going to college? Let's explore a few options that may work for you.

Scholarships and grants

Scholarships and grants are a great way to save money and get through school. It's pretty much free money if you can get it and there are scholarships for virtually everything. They come in all shapes and sizes, from under $50 to covering the entire cost of your degree.

There's also many services out there that will match you up with scholarships, such as ​scholarships.com​. These tools will use the information you give them to find the scholarships that match you best. This will help increase your odds of earning a scholarship and help you avoid wasting time chasing after ones that you don't qualify for. This is the best alternative to student loans as you don't have to pay anything back.

Pay your way through school

If you didn't get enough scholarship or grant aid to cover your educational costs, you can still pay your way through school. While not very attractive, working through school is a common option for many students. You can apply to nearby jobs or find a paid internship to help you earn money while in school. Internships also help you gain real world experience in a career that is related to your major, so they can be an extremely useful option whether you need money for school or not.

To help cut costs, you can avoid expensive Universities and go to a 2-year community college before transferring to a public university with cheap in-state tuition or even your dream school for half the cost. This route may not seem attractive at first because you want to go to a top university, but it is a good way to save some money on school and your degree will still show the name of the University that you ended up at.

Use income share agreements to avoid debt while going to college

Another option that is picking up momentum is ​Income share agreements​, a more socially responsible and balanced alternative to student loans. Income share agreements (ISAs), unlike a loan, are interest and debt free. ISAs also come with many built in protections for you, especially if you end up in difficult financial times. This includes not making payments when you lose your job or your income falls below a certain threshold. They also offer a payment cap if you do really well. This keeps it fair for all parties and aligns the goal of income sharer and investor.

​Purdue University​ has been offering ISAs since 2016 and ​Clarkson University​ recently announced their own program. The ​state of California​ has also just passed a bill requiring the University of California system to develop ISA programs. Furthermore, ​Defynance​ is focusing on providing ISAs to refinance existing student loans. As the concept continues to spread and people begin to appreciate how ISAs are beneficial for everyone, they can become a common and easily accessible alternative to student loans.

If you’re struggling to pay your loan, you’re not the only one. 27% of students who graduated in 2004 have defaulted on their student loans. While missing a payment of your student loans may seem alarming, there are some options that can help you out. But first, what are the consequences of putting off student loan payments?

What are the consequences of putting off student loan payments?

Depending on the type of loan and how late the payments are, many different things can happen. In all cases, your balance will grow as interest continues to accumulate and you have more debt to pay off than before. As interest piles on, your payment can rise and make it even more difficult to pay down your debt.

If your payment is late enough, your loan provider can report your delinquency to the three major credit bureaus. This will cause your credit score to fall and make it harder to get good rates when financing in the future or even find a place to rent. Even worse, depending on how long it’s been since you made a payment, you can enter loan default.

Default

If you have federal student loans, your loans enter delinquency after 90 days without payment. If you don’t pay your student loans for 270 days, they will enter default. Default can cause problems that can take years to fix, so it’s best to avoid this option at all costs.

When you default, you’re automatically responsible for repaying the full amount of the loan. The default will get reported to the three major credit bureaus, hurting your credit score. Your tax return and federal benefit payments can be withheld and applied towards your loan balance. Your wages may also be garnished, meaning your employer automatically sends a percent of your income to pay off the student loan.

If you have private student loans, the consequences for default can be similar. However, you will need to check with your current loan provider to see the default terms.

Other alternatives if you're putting off student loan payments

If you’re struggling to make payments and scared that you’ll enter delinquency or default, there are options for you.

Use an income driven repayment plan

If your loans are federal, you can join one of their income driven repayment plans. With these plans, your repayment will be based off of your income, meaning if you aren’t making a lot, you don’t have to pay a lot. However, with these plans you can end up repaying for up to 20 years until your balance is forgiven and there is always interest accumulating. If your payments are not more than interest, your payoff balance will keep growing. This is a great option to avoid delinquency, but can hurt from the buildup of interest.

Enter Forbearance or Deferment

Forbearance and deferment can be good tools to temporarily pause your payments until you get back on your feet. Each has certain criteria, but you can use them if you’re struggling to make payments. Check here to see if you are eligible. Deference may not accumulate interest depending on the type of loan you have, while forbearance will always accumulate interest. However, both will temporarily pause your payments until you can afford it. Be careful with these options, because again you will accumulate interest which could hurt you in the long run.

Refinance your loans

Another option to help you make your payments is to refinance your loans. This could help lower your monthly payments to a manageable amount. If you refinance to a loan with a longer term than you currently have, your payment will go down in most cases. However, this will also increase the total amount of interest you will pay over the loan’s lifetime. If you make extra payments when you can, this increased interest will be minimal.

One new method that has become popular is an Income Share Agreement (ISA). In these arrangements, a person will pay a small percent of their income for a set period of time in exchange for funding. There is no interest or debt, you just pay that percent until your obligation is complete. ISAs also include downside protection. This means if you lose your job or decide to go for further education, your payments pause and don’t have interest piling on. Defynance is currently working on an ISA for college graduates with debt.

Back in March, congress passed an emergency funding Bill, the ​CARES act​, to help stimulate the economy during coronavirus lockdowns. This $2.2 trillion bill provided much needed relief, including sending every eligible citizen a check for $1,200. Another relief it added was ​temporary pausing​ federal student loan payments and interest accumulation on those loans. And that student debt relief measure is scheduled to end on January 1st, 2021. So with federal student loan payments due soon, what does that mean for you?

What does the end of the pause on federal student loan payments mean for me?

It basically means that everything will go back to how they used to be. Your student loan payments will be due again and you'll have make payments like you were before March. If you made any payments while your payments were temporarily paused, it will be reflected on your balance. Also, your payments will be the same, whether you ​made extra payments or not​. We know that making payments again can be difficult for a lot of people, especially since unemployment is still higher than it was a year ago. So, what else can you do if you can't make your payments?

If you have been saving or spending more in the last few months, know that these payments will come again and could stress your budget. Now can be a good time to reevaluate your budget.

Alternatives to paying my federal student loans

If you're one of many Americans still struggling and you have federal student loans, you can look at entering an ​income-driven repayment​ plan if you aren't already part of one. In one of these plans, you will pay anywhere from 10-20% of your income, and even $0 if you're under a certain threshold. This can be a great option to help you lower your payment if you're still struggling in the current climate. However, these plans can last up to 20 years before forgiving your loan and the loan will continue to build up interest.  

If you're working, but still want to lower your payments without joining a income-driven repayment plan, refinancing may be another option for you. If you refinance, you can choose a loan that fits your needs. You can choose a shorter loan with high payments and low interest or to a longer loan with higher interest, but lower payments. This could be a great way to tailor your loan to your situation and save money in the option. If you do refinance, make sure you're ok with losing the benefits of federal loans, such as the option to enroll in a income-driven repayment plan.

You could also refinance your student loans using an income share agreement (ISA) with ​Defynance​. Much like income-driven repayment, you only pay a percentage of your income. However, with Defynance, you don't have to worry about your interest piling up over time. Instead, you will make a set number of payments based off a percent of your income. After you make that many payments, your obligation is done. If you're interested in learning more, ​visit our site​ or ​click here to apply​.

This year may not have gone exactly how you had planned for it to go. Many New Years' resolutions got off track because of this virus. However, there's still a lot to be thankful for. Here at Defynance, we are thankful to all of you who continue to support us throughout everything and continue to believe in us and our solution. And we're also thankful for some great student loan resources who have been helping people navigate their debt. 

1. Student Loan Hero

​Student Loan Hero​ is an incredible source to help you navigate the frustrating world of student loans. They provide a great number of resources to help you understand and pay down your student debt. They work with a lot of the largest student loan refinancers to help you find an option that fits you. They also provide you with quizzes and calculators that can help you navigate the student loan world. Some of the calculators can help you see how extra payments will save you money in the long run and one quiz helps you determine if you should refinance your student loans. They're an overall great resource to better understand your loan situation. 

2. SpenDebt

​SpenDebt​ is a company built to help you eliminate your debt. They do that by linking to your bank account and setting up a microtransaction to occur each time you spend money. You can choose to set aside anywhere between $0.50 to $5.00 for each transaction you make. Let’s say you grab coffee in the morning and then later go out for lunch. For each of those transactions, SpenDebt will set aside the amount you set, so if you set $1 per transaction, they would set aside $2 to pay off your debt. Over time, these payments will add up and before you know it, you'll be debt free.

3. Dolr

Another company that's dedicated to helping you eliminate your student debt is ​Dolr​. Dolr links to your bank and student loan accounts and creates a personalized repayment plan for you. They use a team of PhDs to analyze and optimize your student debt repayments to help you lower your balance as quickly as possible. Dolr even sets up the payment for you, so you don't have to worry about a thing. You can also talk to your employer about setting up a student loan repayment program through Dolr. 

4. ROEP

Of course, we couldn't forget about ​ROEP​. Defynance's Resources Optimizing Earning Potential Marketplace is there to help you succeed. With resources in five major categories from wellness to finance, you can find companies that are here to help you succeed. Our marketplace is designed to help you improve your well-being, both physically and financially, so feel free to see what ​ROEP has to offer​. 

5. Defynance

And finishing off our list is ​Defynance​, who are helping people eliminate their student loan debt using income share agreements. We may be a little biased, but we think they're a great option to help you refinance your student loans. With their income share agreement (ISA), you only pay a percent of your income instead of a set amount with interest. This means that your payments will change with your income and always be affordable. Of course, if you ever make under $25,000 a year, then your payments pause until you start earning above that again. It could be a great option for a affordable refinance. 

You can ​apply here​. 

Are you drowning in a pool of student debt and unsure of how you can get yourself out? Well, some people have started leaving the United States altogether to avoid their student loans. And can you blame them? With 45 million Americans holding over $1.6 trillion in student loans, a lot of people can feel like they'll never be able to repay it. They average over $30,000 in debt and interest piles up every month. But, is fleeing the country the right way to handle your student loan debt?

What happens if you leave the United States to avoid student loans?

The loans won't magically disappear if you leave the country. In fact, they'll continue to get worse. Your interest will still accumulate on your unpaid balance and you'll accumulate fees over time. This will make it even harder to pay back your loans if you plan on coming back to the United States. If you have any cosigners on your loans, they may have to shoulder the burden for you. If you can't be reached, debt collectors will start calling anyone else that signed on the loan. 

On top of this, your credit score will take a large hit. Missed payments and defaults piling up will continue to hurt your credit, making it impossible to get affordable loans and credit cards in the future.

Can the Department of Education garnish my wages outside the United States?

If you've left the country and are not working for a company in the US, then the department of education has no jurisdiction. This means that they can't garnish your wages. However, they can take away up to 15% of your social security benefits if you ever plan on coming back to the United States. And this would be on top of the accumulated and other fees from avoiding your student loan payments. 

What else can I do about my student loans?

If student debt is weighing you down and you feel like you can't breathe because of it, try a Defynance income share agreement (ISA). With this debt free solution, you can get rid of your student loans entirely. With an ISA, you only pay a small percent of your income over a set period of time and your done. Your payments will fluctuate with income, so if you ever are making under $25,000 a year for any reason, your payments are paused. If this sounds like it could be useful to you sign up here.

For those out there with student loans, you're probably excited to see the push to cancel some or all of your debt. Even presidential candidate ​Joe Biden​ has come out in favor of some student loan forgiveness. And while it can be uplifting to hear that you could get some much needed help with your student loan burdens, it may be too early to celebrate. ​Not everyone​ favors cancelling student debt and it seems to be more of a partisan issue.

What's the issue with student loan forgiveness?

Why wouldn't everyone be a fan of eliminating this huge debt burden? ​Proponents argue​ that cancelling student debt can help stimulate the economy and increase growth. It also gives many people peace of mind from having the burden of loans hanging over them. In a recession, doing so can lead to job growth and increased spending, which could help the economy recover.

​Not everyone​ agrees with them though. Some people think that it's unfair to forgive the loans of some and leave out those that already paid off their loans in a timely manner. Opponents also believe that student loans are the cost of the service of college, a choice that the student took, and they should live up to their obligations. But the biggest reason that people oppose student loan forgiveness is that it would cost too much. There's currently $1.6 trillion of debt across 45 million borrowers. Cancelling even $10,000 per borrower still carries a bill of $450 Billion, not counting those with less than $10,000 in debt. 

Will your loans be forgiven?

Currently there are a couple of ways to get student loan forgiveness depending on your situation, but only if your loans are public. If you work for a non-profit or in the public sector, you may qualify for ​public student loan forgiveness (PSLF)​. For those who work in such a sector for 10 years and making "qualifying" payments, you can have all your debt forgiven.

There's also another way to get student loan forgiveness if you are on an ​income-driven repayment​ (IDR) plan. Through these plans, you pay anywhere from 10-20% of your income. After making those payments for 10 to 20 years, if you have a remaining balance it will be forgiven. Be careful though, because while your loans are forgiven, the amount forgiven will be counted as income and you will have to pay taxes on the amount forgiven.

If you don't qualify for these plans, there may be hope for you. Due to the coronavirus pandemic, the government has ​temporarily paused interest​ on loans and even discussed forgiving some loans. ​Former VP Biden​ has also come out in favor of some form of student loan forgiveness, so it has become quite a popular issue. Of course, relief from the government could take time and would not excuse any current obligations. 

Other ways to help your student loan burden

One way you can lower the burden of loans is by refinancing them. This can help you lower your payments by lowering your interest rate or spreading out payments over a longer period of time. If you plan on refinance, you should shop around with different providers to see which one can offer you the best rate and allow you to pay back the loan on your terms.

Or, if you want to get rid of your loans completely, you could refinance with a ​Defynance​ income share agreement (ISA). Through an ISA, you only pay back a small percent of your income for a period of time. This means that your payment will change with income, so that it's always affordable. Even better, if you ever make under $25,000 a year for any reason, your payments will pause until you start earning above that. This allows you more freedom to live your life.

Welcome to part 2 of our coverage on each candidate's student loan policy. Last week, we explored President Trump's plans for student loans. This week, we'll take a look at his main opponent, former Vice President Biden. While this may not be the factor that decides which candidate you vote for, it's important to know what may happen with any student debt you have. So, let's take a look at what former Vice President Biden's plans for student loans. 

Vice President Biden's Plan for Student Loans

Making College Cheaper

Probably the biggest proposal to come out of the Biden camp is free college for families making under $125,000. Under this plan, public universities would be free for four years for these families. It would also be free for two years for those who attend historically black colleges and universities and free for two years for community colleges. This would only cover tuition costs at public universities, so you would still be responsible for housing and other expenses. It also does not cover private universities.

Biden's Plans for Cancelling Student Debt

Biden has come out to support cancelling $10,000 of student debt for each borrower in response to COVID-19. He has also suggested cancelling debt for those who attend public universities, HBCUs, and minority serving institutions. This would cancel all the debt for those making under $125,000 and phase out for those making more than $125,000. Similar to his free college plan, student debt cancellation wouldn't apply to those who attended private universities.

Income Driven Repayment

Like President Trump, former Vice President Biden has proposed some changes to income-driven repayment plans as well. He would make graduate student loans ineligible for income driven repayment plans and automatically enroll undergraduates into an income driven repayment plan. He would also lower the payments to be 5% of income instead of anywhere from 10-20%. Biden would also change the amount of income to defer payments to $25,000, instead of basing it on poverty levels for individuals. This would mean that anyone making less than $25,000 a year would automatically have $0 payments. He has also proposed making any forgiveness under these plans tax-exempt, instead of being taxed as income as it currently is. 

Biden's Student Loan Forgiveness Plans

Joe Biden also wants to change the current public student loan forgiveness program. He has proposed forgiving half the balance after five years of work in eligible sectors and removing the full balance after ten years. The former Vice President has also suggested forgiving $10,000 a year for up to five years for those working in eligible jobs. It's also important to note that the $50,000 in forgiveness over five years would not replace the current loan forgiveness program, but be added on to it.

Biden has plenty of proposals regarding student loans and while it may not be the biggest issue, student debt is still a large issue. Whether this influences your decision or not, remember to go out and make your voice heard this election season.