Student loan payments

Student Loan Payments

by Wendy Black Polisi on October 5, 2009

Student loan payments are something that millions of American’s have. As times get tough and unemployment continues to rise, many people are concerned about student loan default.

If you are not yet that far behind on your payments you should first get information on refinancing student loans. This may be an option for you.

If this is not an option, you should know that one of the best things you can do is communicate with your lender. The federal government has many programs in place designed to help you avoid student loan default.

If you are not yet in default, but are concerned about making your payment, the first thing you should consider is income based repayment.

Income Based Repayment is designed for people who have low incomes or people who are facing tough times. It is designed to help bring your payments back in line with you income so that you can avoid the potential of default. To learn more, check out my post about the new program.

If income based repayment isn’t an option for you, there are still ways to help you make your student loan payments.

The first, and one of the best, is deferment. If you have gone back to school, are unemployed or going through other financial hardship, you may qualify. If you are qualified for loan deferment, your loans can be deferred for s specific period of this time. During this time, your loan will not accumulate interest.

If your lender tells you that you are not qualified for a loan deferment, you may still qualify for forbearance. You may still be required to make student loan interest payments, but forbearance will help reduce (and possibly eliminate) your student loan payment for a specific period of time. Unlike a loan deferment, interest does still accrue.

If you have recently graduated from school, you also might want to consider graduated payments. This payment option offers a lower payment in the early years and your student loan payments will increase as time goes on. The down side to this is that interest will continue to accrue, so you will pay more over the life of the loan.

If you are already facing student loan default, you may want to consider Student Loan Rehabilitation
To learn more, click here.

If you have bad credit, but are looking to return to school, you may want to check out this article on student loans for bad credit. It provides you with a comprehensive look at your options

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Student Loan Rehabilitation

by Vincent Polisi on August 28, 2009

Student Loans can be one of the most difficult credit issues you will face.  If you have fallen behind on your student loan payments, you probably already know that it is one of the most difficult debts to deal with.  Unlike other debts, bankruptcy laws are such that student loans are not dis-chargeable in a bankruptcy.

Additionally, the IRS will likely take any tax refund that you are due and send it to the Department of Education until your loan is paid in full.  (By the way, if this happens to you and you want to challenge it, you can go to www.studentloanborrowersassistance.org to learn more)

The good news is that the government offers you the ability to rehabilitate your student loans!

To do this, you will first need to call your lender and let them know.  They will set an acceptable payment schedule up for you.  Then you will need to make between 9 and 12 payments on time.  (Don’t slip up – they used to offer this as often as you needed it, but now it is a one shot deal!)

Once you have done this, your loan will no longer be considered in default and the default status will be completely deleted from your credit file.  Some lenders will offer to delete the negative history in entirety.  If they do, MAKE SURE YOU GET THIS IN WRITING.  Lately, I’ve been hearing of people that were promised this but once the 9-12 month period was up have been having difficulty getting what they were promised.

Other benefits of rehabilitating your loan include that you will regain eligibility for loan benefits such as deferment and forbearance.  (make sure you use this if you are ever at risk of falling behind again) Additionally, your wage garnishment ends and the IRS will no longer take your tax refund.

It is important to note that most student loans are not discharged in a bankruptcy.  So, even if you have filed for bankruptcy, it is important that you rehabilitate your student loans.  Not doing so can make it very difficult to establish after bankruptcy credit – even something that is typically easy to get like credit cards after bankruptcy.  In fact, having outstanding student loans will make it impossible to get mortgage loans after bankruptcy.

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