Alternatives To Student Loan Consolidation

Q: I am having trouble making my student loan payments on the current income I receive. I have applied for student loan consolidation with two separate student loan companies, but was not approved for the consolidation at either company. What are some alternatives to student loan consolidation? I need to do something to avoid defaulting and damaging my credit.

A: A private student loan consolidation can be difficult to obtain for some borrowers. However, if you have federal student loans, you may find it easier to obtain a federal student loan consolidation for your federal student loans, which could help reduce the monthly amount you own on your federal student loan payments. While student loan consolidation may help lower your monthly student loan payments, it may not always be enough to completely eliminate your student loan payment problems. When student loan consolidation is not available, or does not reduce your monthly student loan payments enough, there are some other alternatives to student loan consolidation that may help.

Income-Based Repayment
For borrowers with federal student loans, check to see if you qualify for Income-Based Repayments. This federal student loan repayment plan can help reduce your student loan payments by limiting the amount you owe each month based on your income and family size. For more information on Income-Based Repayment visit

Forbearance and/or Deferment
Forbearance and/or Deferment are an option typically offered by both private student loans and federal student loans. Forbearance and/or Deferment can be used to suspend your current student loan payments for a specific duration of time, generally in 6 to 12 month increments. Depending on the terms and types of student loans, borrowers may be eligible for multiple deferment and/or forbearance periods. Borrowers should be aware that with most student loans, interest will capitalize during periods of deferment or forbearance, so it is important to weigh the pros and cons before utilizing one of these options. Though a forbearance or deferment is not a long-term solution to reducing your student loan payments, it can help borrowers by suspending their student loan payments while they seek employment, additional employment, etc to help manage their student loan debt long-term. Contact your student loan servicer/lender to learn about your options for deferment or forbearance.

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