Many college students today are graduating with a huge load of student loan debt. As the cost of college rises, more and more students are forced to take out loans in order to complete their education. Now, in the face of the country’s economic crisis, many of these students find they are unable to find a job, or are only able to get a job paying much less than they expected to earn after graduation.
If you owe federal student loans, be aware that the government does not hesitate to use strong techniques to get their money back. The penalties can range from having your tax return intercepted, retaining a portion of your federal benefits, such as social security or disability payments, garnishing your paycheck, or suing you for the amount owed.
If you are one of those students who are now struggling to maintain your student loan payments, there is some help available. Although student loans generally cannot be eliminated through bankruptcy, there are other ways to avoid the unpleasant consequences of not paying the debt. Here are some options:
Consider Changing Your Payment Plan
You have the option of choosing from a variety of payment plans. You may have selected one you thought you could maintain but have now discovered that you can’t keep up with it. By choosing a different plan, you may be able to lower your monthly payments without suffering a penalty. For instance, if you switch to an income-based repayment plan the amount due each month will be based on the amount of income you have and the size of your family. This could help bring the payments down to a manageable level.
Consolidate Your Student Loans
If you owe more than one lender, consolidating your student loans could be beneficial. You would then have just one payment to one lender rather than multiple payments each month. The negatives are that you will probably have to pay for a longer time period and you may pay a higher interest rate.
You May Be Eligible for a Forbearance or Deferment Plan
If you are experiencing a financial hardship due to unemployment, illness, or other special circumstances, you may be eligible for a deferment or forbearance. These plans allow you to reduce or postpone payments on a student loan, but you should remember that these are temporary solutions. You will still be expected to resume paying sometime in the future when the crisis has eased.
The negative side to postponing your payments is that interest keeps accruing, so the amount you owe will continue to climb. If you are able to make even small payments, you should consider other options first.
Avoid defaulting on your student loans and jeopardizing your financial future. Don’t wait until it’s too late to ask for help.
About the Author: Dee is a full-time writer and blogger with a passion for personal finance, credit repair, education, and more. She is also a regular contributor to CreditLoan.com.