Thinking about cutting your losses and dropping out of college? You’re not alone.
A 2011 Harvard Graduate School of Education study found only 56 percent of students who enter four-year programs graduate within six years. For students in two-year programs, only 29 percent finish within three years.
The rest? Many spend several more years struggling towards a degree. while others simply drop out. Of course, this poses a problem for students who leave school before completing a degree — they’re still responsible for all student loan debt they incurred, but don’t have the same competitive advantage in the job market as grads.
Dropping Out of College Without Defaulting on Loans
Without steady work, students are at risk of defaulting on their loans. U.S. News reported students who quit school are four times more likely to default on their federal loans than graduates.
Default will immediately damage your credit score quite a bit, making it tough to open a credit card, qualify for a home, and access other financial tools that are only available to consumers with good credit. In other words, you want to avoid defaulting on your student loans at all costs.
Students who drop out of school and want to avoid student loan default should take the first step of going through exit counseling. Typically, when a student graduates, they are required to go through exit counseling, but many don’t.
Exit counseling is important because you learn about repayment options, such as deferment and forbearance.
Students who drop out without counseling might not know about these options and stop paying their bills when they encounter financial hardship. But the best thing to do in this situation is call your student loan servicer and ask what repayment options are available.
Instead of Quitting School, Go Back Part-Time
One way to handle student loan debt is to go back to school part-time. In many programs, part-time is considered six to nine hours of schoolwork — the equivalent of two or three classes per semester. By going to school part-time, your student loans will go into deferment and you can still work.
If you work during the day and go to class at night, it will allow you to make money and possibly prevent you from having to take out more student loans. At the same time, the payments on your current student loan balance will not be due until you graduate.
The bonus, of course, is that when you do graduate, you’ll be more employable thanks to that college degree. Ideally,you’ll be making more money than you were before because of your education. This, in turn, will make it easier to pay your student loan bill each month.
If you know that college isn’t right for you, you can also consider going to trade school. Your student loans will still be deferred while you’re in school, and you can learn a skill that can lead you to a career where you make much more than minimum wage. This is a great option for those looking to increase their income without going back to a traditional university.
Look Into Repayment Plan Options
When it comes to your student loan payments, there are numerous repayment options. You don’t have to have a 10-year repayment plan with high monthly bills. Instead, you can call your student loan servicer and ask if you qualify for other repayment options that will lower your bill.
One of the most popular options is income-based repayment, where your bill can only be a certain portion of your income. Call your student loan servicer to see if you qualify, and if you don’t and are having trouble paying your bills, ask about forbearance until you can get on your feet.
Sometimes people drop out of college because they have other responsibilities that are more important, like taking care of family members or working. Others simply learn college isn’t right for them. Many more simply can’t afford it.
Quitting school is a difficult decision, especially if you have student loan debt, but you shouldn’t panic. There are numerous repayment options available to you, and if you decide to return to college or trade school, you can buy yourself more time to pay off your debt.
In sum, your life is not over because you dropped out of college. There are plenty of people without college degrees who are immensely successful. Your focus though should be to get out of debt quickly so you can spend the rest of your life focusing on the goals you want to pursue next.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|