Prevent Your Student Loans from Becoming Default

Many people don’t have the funds to attend college. Fortunately, the government provides student loans to many individuals who would otherwise not have the opportunity to attend colleges and universities. This comes in especially handy since education costs continue to rise.

Although, student loans are blessing for many individuals and their families, they can also be a curse. At the time that most individuals are entering college they are young and new at managing their finances. Many individuals aren’t familiar with debts, credit, and budgeting.

Yet, this is debt is usually very substantial compared to any debts they have had up to this point. In addition, these debts are taken much more seriously because they are backed by the government. This creates a situation where young individuals can have their credits tarnished for a very long time. They may also experience garnishments, tax liens, and other collection efforts. Unlike other debts, these government debts may not be dismissed even with a bankruptcy.

However, student loans do not have to ruin your future. There are many options for an individual whose student loans are facing default. Deferment, consolidation, and extended repayment plans are available. Many times, these options will prevent a borrower from defaulting on their student loans and help them weather the storm.

A deferment is when a borrower is allowed to stop paying on their student loan for a specific period of time. This may be a deferment of one payment of may be a deferment of a year or more. The balance of the loan remains and interest may accrue during this time, but it won’t tarnish your credit or start collection procedures.

If you can pay some of your loan payments but are having trouble with the amount of the payments, you may want to extend the payment of your loan. This will reduce the monthly amount of the loan. However, it is going to extend the amount of time you will be paying off the loan and may increase the total amount because of interest costs.

Deferments are available for a number of circumstances. You can get a deferment if you are unemployed, experiencing hardship or attending school full-time. To obtain a deferment you must apply for a deferment through the company that has your loan. There may be certain requirements and documentation that you must complete and turn in to receive the deferment, but they will help you with these steps.

If you have more than one loan and are finding it difficult to keep track of it all, than a consolidation loan may be right for you. A consolidation loan is a when a company purchases your loans from each of the institutions you owe. You than that one company one payment a month based on the amount of the loans and the interest that company charges.

When consolidating your loans, you want to shop around. There are a great deal of loan companies that prey on individuals who are facing debt. The amount of interest and the amount of time you are going to have to pay on the loan may vary widely from one company to the next. Pay close attention to the terms of the loan and get quotes from a few different companies before you decide on one.

If you are facing default on your student loans, the best thing to do is contact your loan company. The earlier you figure things out the less it will cost you in the long run. These types of loans don’t go away and only get worse with time. Don’t be afraid to talk with them your loan, they benefit from finding the right loan terms for you because something is better than nothing.