Are You Having Problem Paying Student Loans?
Paying Student Loans Made Easy
It is no longer a news that a large number of Americans are having problem paying student loans. This is evident by the growing number of people who are falling behind in making their monthly payments. Based on the student loans statistics made available by the Federal Reserve Bank of New York Consumer Credit Panel, the National Student Loan Debt is now $1.41 trillion being owed by about 45m borrowers representing 70% of College graduates. The average debt per student borrower is $37,172 while student loan default and delinquency rates are put at 11.5% and 5.41% respectively.
If you are among the people who are finding it difficult paying student loans, there are options available to you so that the loan will not enter default. In fact, it is for your own good to try as much as possible to prevent your student loans to enter default. Once your student loans enter default, the entire outstanding amount becomes payable immediately and you will lose your other privileges such as student loan forbearance and deferment, student loan forgiveness and you will not qualify to receive new federal student loans. Besides, your wages can be garnished and the default will be reported to the three major credit bureaus. This will definitely hurt your credit score. Default can stay as long as six years on your credit report. Therefore, if you are finding it difficult paying your federal student loans, you can try any of the following options:
Read Also: How to Get Out of Student Loan Default
Seek for forbearance or deferment: Forbearance or deferment is that type of an arrangement with your student loans servicer that allows you to temporarily stop or reduce your payment amount on your student loans. You will need to approach your loan servicer and discuss this with them. To qualify for student loans forbearance or deferment, you will need to satisfy certain conditions. For instance, for you to qualify for student loan deferment, you must be enrolled in school for at least half time; enrolled in graduate fellowship program; enrolled in an approved rehabilitation program for the disabled; you are unemployed and you are seeking employment; you must be able to prove that you are suffering economic hardship. Whether you apply for deferment or forbearance, you should understand that interest will still accrue on your student loans during the period that you temporarily stop your monthly payment. Under forbearance program, you will be responsible to pay all the accrued interest during the forbearance period. However, you have the option of paying the interest immediately or you can choose to capitalize the interest thereby making it to become part of your student loan principal. During deferment, interest will also accrue but the main difference here is that government will be responsible for the payment of the accrued interest on certain types of federal student loans. While deferment and forbearance will not take the student loans away from you, it will help you avoid default.
Read Also: Understanding Student Loans Deferment and Forbearance
Change your repayment plan: When it comes to paying back federal student loans, you have many options available to you. The repayment is very flexible. If you are on a particular repayment plan that creates too much tension on you or may be your income level cannot support the monthly payment amount, you can apply to change to more friendly repayment plan. There are payment plans that are tied to your income. If you opt for any of such plan, paying student loans will not deny you the privilege of attending to your other needs.
Change your payment due date: What is your payment due date? Does it coincide with the time you usually receive your monthly salary? If you normally receive your salary after your payment due date, you may find it difficult paying your student loans every month. If this is the case, you can simply approach your student loan servicer to help you change your payment due date to the date that will make the payment more convenient for you. Changing your payment due date to the time you usually collect your salary will make the payment easy for you. This will also help you avoid late payments.
Consolidate your loans: If you have two or three loans you are servicing, you will agree with me that it can be difficult keeping up with their different payment due dates. Instead of having to be managing three different loans at a time, you can decide to consolidate the loans into one. This will require you taking one new loan to pay off your existing loans. This will make things easier for you. However, you need to ensure that you get the new consolidation loan under good terms.
Read Also: Student Loan Rehabilitation and Consolidation
These are good ways of resolving problems paying student loans especially when your own loan is federal student loan.