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How to deal with your student loan debt

Student loan is probably the worst kind of debt that you can acquire. Its expensive and can grow very fast with interests. Moreover, student loans can't be eliminated through bankruptcy, except some rare cases of permanent disability or undue hardship. Yet, more and more students are compelled to take out student loans to pursue their careers. As a result, they graduate with tons of debt.

Many try to avoid the situation by side stepping student loan payment but its hardly a solution as the debt keeps mounting. You can also have your income garnished if you default on your student loan. However, still ,it's not a debt without remedies.

You would have to pay the principal: If you are trying to settle your student loan for less than what you owe, you must be aware of the fact that you can't get your principal amount reduced. However, you may get some of the late fees and interests waived.

Income based repayment plan: The Federal Government has introduced the income based repayment plan in July 2009, which would let the students lower their payments to a comfortable level without sacrificing their scores. However, this is only available to Federal student loans.

The income based repayment plan caps the monthly payment of the borrower at 15% of his income if he earns 150% above the poverty line. Borrowers earning less than $16, 000 a year, however, are relieved from making repayments.

Student loan consolidation: You can consolidate one or multiple student loans into one and pay it off comfortably. The FEEL loan allows the borrower to consolidate his multiple Federal Student loans into one.

The consolidation loan would be forwarded by a private lender and the credit bureaus would be notified accordingly.

Deferment: As the old adage goes "stay in school and stay out of debt"; student loan can be deferred when you're enrolled in school for full-time. You can also defer your Federal student loan payment when,

  • You're in financial hardship
  • Unemployed
  • Actively serving the military or other national services

The bottom line, however, is when you find it hard to payoff your student loan, take immediate action. Though during the recent economic recession there has been an outcry from various section of the society to forgive student loan debt as more and more graduates are finding it hard to secure a job in the tight employment situation, the Government is yet to take a decision on this. Till that time, student loan is a kind of a debt that must be paid off.

With proper help you can
  • Lower your monthly payments
  • Reduce credit card interest rates
  • Waive late fees
  • Reduce collection calls
  • Avoid bankruptcy
  • Have only one monthly payment
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How much debt consolidation can save you