Getting Help With Student Loan Debt: What Are My Options

Many recent college graduates (and not so recent college graduates) are dealing with overwhelming student loan debt. If you are just considering college for the first time, one of the best ways to avoid student loan debt is to get educated on all of your financial aid options for college (not just student loans). If you have already accumulated student loan debt from college, and are now having a difficult time managing your student loan debt, there is help. For those of you with federal student loan debt, the options are greater, however there are some options out there for dealing with private student loan debt as well.

Learn About Your Student Loan Debt Options

Depending on what type of student loan debt an individual has, their options for debt relief may be different. Federal student loan debt typically offers the most options for debt relief in the form of alternate and income-based repayment programs, as well as student loan forgiveness programs. For private student loans, the debt relief options tend to be more short-term. Most private student loans will offer a deferment or forbearance option, which can help relive an individual of their monthly payment obligations while unemployed (for example), however some individuals may have the option of consolidating their private student loans, which may provide a more long-term debt relief solution in the form of a more manageable monthly payment amount. Before utilizing a debt relief program or option, be certain to understand the pros and cons associated with it. For example, a student loan consolidation may reduce your monthly student loan payments, however you may end up paying more in interest charges over the lifetime of the loan, or a deferment on your student loans may halt your payments for a period of time, but the interest on your loans will likely capitalize.

What Should I Do If I Can’t Pay My Student Loans

Here are some helpful tips on what to do if you find yourself in the position of not being able to pay your student loans back, or are struggling with your monthly student loan payments. Depending on the type of student loans a borrower has, they may have more options for student loan repayment than they are currently aware of.

1. Contact your student loan servicer or student loan lender and explain your situation to them immediately. They may be willing to work with you or offer some suggestions to defer your student loan payments for a period of time, or offer consolidation to help make your monthly student loan payments more affordable.

2. Review your repayment options. Your servicer may be able to reduce your monthly payment amount through various repayment plans including student loan consolidation.

3. Ask your servicer if you qualify for a deferment or forbearance. Typically all student loan types offer one or the other.

4. Show good faith to your student loan lender by following through with all arrangements you make with them This includes completing and returning forms timely and sending payments as promised.

5. If for some reason you are unable to make your student loan payments as promised, contact your servicer right away to make alternate arrangements so your account does not default.

What Happens If Student Loan Payments Are Ignored

Not repaying your student loans or simply ignoring the student loan payments, should be avoided at all costs. Borrowers who can not afford to pay back their student loans, should contact their student loan lenders immediately to find out their options. There are some federal programs set up to aid qualified borrowers in the repayment of their student loans, and some private student loan lenders may be willing to work with their borrowers who are willing to put forth a good faith effort. Ignoring student loan payments can result in the following actions being taken:

1. Your loans may be turned over to a collection agency. You’ll be liable for the costs associated with collecting your loan, including court costs and attorney fees.

2. You can be sued for the entire amount of your student loans. Your wages may be garnished. Your federal and state income tax refunds may be intercepted. The federal government may withhold part of your Social Security benefit payments.

3. Your defaulted loans will appear on your credit record, making it difficult for you to obtain an auto loan, mortgage, or even credit cards. A bad credit record can also harm your ability to find a job.

4. You won’t receive any more federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on-time monthly payments. (You will also be ineligible for assistance under most federal benefit programs). You’ll be ineligible for student loan deferments. Subsidized interest benefits will be denied.

5. You may not be able to renew a professional license you hold.

6. You may be prohibited from enlisting in the armed forces.