A study by EY and EIG (Economic Innovation Group) in 2016 found that millennials are less risk taking and could even been described as conservative, so while many would entertain the notion of a startup business (more than 60% of those who participated); most acknowledge they’d struggle to finance it. Enterpreneurialism is not alive and well with this generation and that should concern us as start up businesses are needed globally.
Millennials are more highly educated than previous generations however they’re not as driven to succeed due to the burden of student debt. This might explain why millennials actually prefer to climb the corporate leader than start their own business.
There are ways to better manage student loan debt including consolidation and refinancing. Here’s some information for your perusal, but remember it’s professional advice, for that you’d need to get legal and professional help from authorized industry experts.
Consolidation and Refinancing
Government-issued student consolidation loan
Using a government-issued student consolidation loan, students with federal education loans can opt for consolidation of their existing student debts. This option is only available to those with federal loans, as private loans cannot be consolidated in this fashion.
The government program consolidates all of the student’s existing debts into a single loan with a single interest rate, due date and monthly payment amount. This federal program also enables students to make repayments on an income-based scale without any regard to their credit score.
Refinancing – loans issued by private lenders
Private debts must be refinanced rather than consolidated through the government, which can make things a bit trickier – especially if you are low-income and/or have poor credit. As with consolidation, refinancing entails a single monthly payment amount, interest rate and due date as a result of all of the student’s debt being “wrapped up” into one loan.
The lender involved in this situation essentially pays off the student’s debts and then issues the student a loan for the total amount, plus interest. The terms can vary depending on what the borrower wants, such as fixed-rate vs. variable rate, and the duration of the term. A longer term means that the person has more months to pay off their debt, and thus has smaller monthly payments. However, this usually means paying a lot more in interest when compared with a shorter repayment plan. You can use a student loan refinance calculator to get an estimate.
The difference here is that refinancing loans are issued by private lenders. This means that a person’s credit score counts significantly toward their interest rates as well as for approval of their application.
You need to be placed on an income-based repayment plan.
Your credit is not in great shape.
You have no co-signer available to help you with refinancing.
Your income isn’t necessarily steady.
You like the terms of your existing debts.
All of your overdues are federal education loans.
You have a stable income.
You do not need to make income-based payments.
You have strong credit or a co-signer with strong credit.
You want to be able to customize the terms.
Both refinancing and consolidation are valuable services that can make it easier to repay student debt that’s gotten out of hand. Both come with their advantages and disadvantages, but overall work to help students get back on track and not have their lives bogged down by the weight of the debt. Consider which option is right for your situation and go from there.
Start A Business
Once your mind is off repayments you will be able to concentrate better on your business. You will be able to plan and make your business better. You will also be able to get financial support for your business because the financial companies will see that you are determined to pay off your student debts and also make it big in business.
Start small and over time increase your business. This is a time tested strategy; you will be able to succeed with just this one strategy. And never ever fail to pay your instalments on time. This is very important. Ensure that the instalments are taken care of. In fact, keep a provision in your accounts to hold two months of instalments; this will keep you in good stead in the long run.