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So many people default on federal student loans and there is absolutely no reason for this to happen. Follow these simple steps and you will never have to deal with the hassle and expense of defaulting on your loans.

  1. READ YOUR PROM NOTE. As a former financial aid officer, I constantly saw too many students simply sign their promissory notes without reading a word of the contract. Right about the signature line is the statement in bold print "THIS IS A PROMISSORY NOTE. I HAVE READ AND UNDERSTAND THE TERMS OF THIS NOTE EVEN IF ADVISED NOT TO. (This is a direct quote off a sample stafford prom note)
  2. Save a copy of your prom note. Put it with important papers.
  3. If you move, call your lender immediately with your new address. DO NOT depend on USPS mail forwarding. It you had read the prom note, you would know that you have 10 days to notify your lender of any change of address and phone number. Email address too.
  4. When you graduate or leave school, you have a 180 day grace period. This gives you time to find a job and start payments. If you have not found a job or are under employed and cannot afford the payments, contact your lender immediately. Do not wait until your payments are past you have no job lined up by day 170 of your grace period, call your lender immediately. You have a right to 3 years deferment for economic hardship.
  5. CONSOLIDATE WITH DIRECT LOANS You can do this near the end of your grace period. This will organize your loans and in most cases, lower your payment. Their are several payment plans available...regular, graduated, income contingent and income based. The last two will require a check of your tax return but the payments are geared to income. If the payments are still too high, contact Direct Loans and they will lower them.
  6. Do not ignore calls or letters from your lender. Usually there is a problem if they call you. Take the call immediately and open your mail.
  7. Again...if you move, call them and give them your new address. DO NOT use your parents address....I have heard of too many cases of borrowers using their parents address and not getting their mail. It does not hurt to call your lender once a year just to check up and make sure all your information is current.
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