Know student loan repayment options before defaulting
10/26/2010
By Credit.com Staff
Student loans are one of the most prevalent types of debt in the U.S., with average totals surpassing credit card debt. The high unemployment rate has also made it more difficult for many Americans to meet their student loan obligations, forcing many to default and ruin their credit. But consumers can take steps to make their payments more affordable or suspend them for a short period.
Recent graduates who cannot find a job by the time their grace period is over may be able to defer their loans. Federal deferment is usually allowed for consumers who are on active military duty, unemployed or enrolled at least half-time in school, according to The Boston Globe.
Consumers who are employed, but struggling to keep up with payments, may lower their burden by extending their repayment period, which will lower their monthly bill. However, individuals may end up paying more in interest over time. Individuals with a small income may also qualify for an income-based repayment plan, which will calculate their monthly payments based on how much money they bring in.
Individuals who think they may default on their loans should contact their lender immediately to determine if other repayment options are available.
