Student loan default rates are soaring as many people struggle to pay their bills. Many borrowers with student loan debt who’ve been relying on help from forgiveness plans are finding that even those programs are being cut in some states. Here are four ways to find help with debt from student loans.
Student Loan Debt Consolidation
If you have multiple student loans, you may be able to roll your debt into a consolidation loan with lower interest and monthly payments. Federal student loans can’t be combined with private loans when consolidating. Also, keep in mind that you’ll probably end up with a longer period of time to pay back the money.
Deferment of Debt
Don’t delay if you have debts you need help repaying. Contact your loan servicer to see if you qualify for a deferment, which is a temporary suspension of your federal student loan payments. If you have a subsidized FFEL, Federal Perkins Loan, or Direct Stafford Loan you won’t owe any interest during the deferment period, but you will with an unsubsidized loan. Reasons you might qualify for a deferment include unemployment, re-enrolling in school, active military service or economic hardship.
Student Loan Forbearance
Forbearance is a temporary postponement or reduction in student loan payments due to financial difficulties. If you’ve been turned down for a deferment you may still be eligible for forbearance. During the forbearance period you’ll be responsible for paying interest, which will continue to accrue. Forbearance can be granted by your loan servicer for up to three years.
Income-Based Repayment Plan
People with a lot of student loan debt may be eligible for help through a new income-based repayment plan beginning July 1. Payments will be based upon your income during any period you are facing partial financial hardship. The payment amount will be adjusted annually, and the payment period could last longer than 10 years.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.