Avoiding Student Loan Default
On average, over half of graduating college students has at least $30,000 in student loans. When you apply for student loans, the monies that you’re granted almost seem like play Monopoly money. However, when you graduated college, it is real money that you are obligated to pay back. Default occurs when no payments have been made on a student loan for 270 days. Defaulting on a student loan can have long-lasting, negative impacts on your financial future. Here are a few tips on how to avoid student loan default:
- Make sure you understand your responsibilities regarding your repayment obligations.
- Always borrow for college expenses only.
- Keep all records, including signed forms, canceled checks and letters.
- If you change your school, address, phone number or name, notify the lender.
- Keep credit card debt to a minimum.
- Maintain a spending plan that meets your monthly income.
- Consider making nominal student loan payments while you’re still in school.
- If you have difficulty paying off your student loan timely, seek help right away.
Debt Counseling Services
If you do have problems paying your student loan, you can seek help with a debt counseling or student loan consolidation service like this example. The financial counselors at a debt counseling service can give you advice. You may qualify for alternative payment plans. With an income sensitive payment plan, your monthly payments can be adjusted based on your total monthly gross income. There are also graduated payments plans and extended payment plans. With a graduated payment plan, the monthly payment is lower at first and then increase over time. Extended payment plan allow students with loans over $30,000 to pay over a 25-year time period.
At a debt counseling service, your counselor can also advise you about deferment, forbearance and consolidation. Deferment will allow you to postpone your student loan payments if you qualify for disability, unemployment or economic hardship. An economic hardship can also qualify you for forbearance. With consolidation, you may be eligible to consolidate your student loans for easy payment. Often, consolidation reduces your monthly payment.
The important point is to get help when you need it. Don’t wait until you begin to fall behind in your monthly obligations. With debt counseling assistance, your counselor can also help you develop a monthly budget to stay on top of your financial obligations. Many financial counseling services also offer free workshops and educational programs for money management and tips on how to stay on a budget.read more