Student Loan Payments - Personal Finance for Teachers

This post is about finding relief/help if you fall behind with your student loan payments or just cannot afford to pay them. There is more help available when you have federal based student loans such as Stafford and Grad PLUS loans; and that is the primary focus of this post.

For years, taking out student loans to fund your college education was a great idea and almost a ?no-brainer?. After all, when you graduated, it was almost a guarantee that you would find a position that would pay enough so that you can timely make your student loan payments. That is not a guarantee now ? you might not find a job at all. Or, you might find one that does not pay as much as you were expecting.

So what can you do when you have trouble paying or cannot make your student loan payments? The good news is there are many options available to you if you find yourself in this position.

When I graduated, I had a rather small amount of student loans that I thought were no big deal. I would make extra student loan payments from the wonderful and high-paying job that I found after graduation. That did not happen. When I graduated, the job market was terrible for Finance graduates. I finally found a job making a whole lot less than I planned. I could not really afford to make my student loan payments. The only relief that I could find was a forbearance. Which basically means that I did not have to make payments for a certain period of time and when the period of time was over, the slate would be clean ? the loans no longer showed past due balances. This remedy is still available, however there are several more depending on where your loan came from.

Government Based Loans
These are loans such as the Stafford and Grad PLUS loans which are programs set up by the federal government. If you do not know what kind of loan that you have, you can go to the National Student Loan Data System. Here you can find information about all of your federal student loans.

Now that you have found out which kind of loans you have, here are the tools available to you to get your student loans back on track:

• ?Forbearance (sometimes called a deferment) ? With federal based student loans your loans can be in forbearance for up to five years in 1 year increments. This will essentially let you stop making payments on your loan for the period of the forbearance. When the forbearance is over, your slate will be wiped clean with the lender ? you will no longer be in default. The interest on your loan will accrue while under forbearance and it will be added to the principal of the loan. The forbearance should be used if your situation is short-term in nature.

• ? Rehabilitate the loan ? Rehabilitating the loan will require speaking to and negotiating with your lender. The terms of a rehabilitation are basically that you and your lender come to terms on a reasonable and affordable payments. You will then make those payments nine times over a ten month period. Once the payments have been made to satisfy the rehabilitation, the default is removed from your records. If you have problems coming to terms with your lender about what is reasonable and affordable, there is help. You can call the Federal Student Aid Ombudsman at 877-557-2575 and ask for their help.

• ? Consolidate your loans ? This is done primarily through the Federal Direct Loan program. This program lets you enter into a payment plan that is based on your income. However, the record of the default stays on your credit report for 7 years.

• Bankruptcy ? If your financial position is such that you are going to file bankruptcy, student loans as a general rule are not included in the debts that get discharged. However, there are certain circumstances where the student loans can be discharged. You will have to talk to your bankruptcy attorney for the specifics.

• ? Death or Disability ? Depending on the circumstances such as death or total disability your loans are eligible to be canceled. To find out the specifics go to www.studentloanborrowersassistance.org.

As you can see from above, communication is key. If you begin to have problems paying your student loans (or any debt for that matter) make sure you talk to the lender and make them aware of the situation and ask if there is anything that you can work out to help resolve the problem.

Tagged as: student loan payments, Student Loans

Source: http://personalfinanceforteachers.com/463/student-loan-payments-what-if-i-cant-make-them/

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