Keep your student loan account current, prevent it to be defaulted.
Student loans are such liabilities which are, usually, not charged off easily. Seldom is it written off by bankruptcy. Once you receive the loan you have to pay it back. But most of the students find it difficult to pay multiple loans at high interest rate and as a result the account loses its â€˜current' status. Here is a list of mechanisms for preventing your student loan defaults.
Consolidation â€“ The main purpose of consolidation is to offer you low interest rate and long repayment period. Usually the rate of interest for a consolidation loan is much lower and as a result borrowers find it within their means.
Deferment â€“ Under certain circumstances you can defer the repayment of your loan. Deferment is allowed if you are going back to school or continuing with medical internship or facing a financial hardship. Deferment is also allowed if you are involved in public services like serving armed forces etc.
Forbearance â€“ Forbearance is another option to avoid defaults. Here you can holdup the payment of the principal amount. You have to pay the interest, but may delay paying the principal. It cuts the monthly installment down but extends the repayment period.
Discharge or cancellation â€“ Your federal loan is forgiven for some special cases. You do not need to pay it back. Discharge is offered for some specific professionals, like teachers serving underserved areas. It will be reported as discharge to the credit bureau and any non payment history on the said account will be deleted. A discharged student loan does not make you inept to apply for more financial aid in future.
The above options you can adopt to keep your loan current, so that you have a smart credit history. If you start your career with a good score it is definitely an added advantage.
If you are already falling back with your payments, you can try a rehabilitation program to regain the current status.
Hope our community finds this useful. Please post your views here and keep us updated on this topic.
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