With it being a bit of a challenge to get a job right now, some of you may be concerned with how you are going to pay off your student loan debt or you may already be struggling to pay them now. Don’t freak out! Beverly Blair Harzog, spokesperson for CardRatings.com and co-author of The Complete Idiot’s Guide to Person-to-Person Lending says, “When you are having problems paying your loans, talk to your lender. It doesn’t hurt to ask.” So, if you are struggling to pay or know you are going to miss a payment, tell your lender. They are willing to work with you but you have to tell them what is going on. And, before you call, Harzog says you need to have a plan of action. Here are three options for you to think over.
1.) You can ask for a forbearance which is when the lender agrees to postpone your monthly payments but only for a limited amount of time. You are eligible up to three years of forbearance, however, there are no guarantees that you will get three years. The length of time allotted depends on the generosity of the lender.
2.) If you have just graduated, you automatically get a six month grace period before you have to start paying your loans back. But if that window is shrinking and you are not making enough to start making payments you may need to ask for a deferment. Deferment, to be clear, is when your payments are postponed before you have even started paying them.
3.) You can ask to negotiate the monthly payment down. Keep in mind that the lower the payment, the longer it will take to pay off, the more interest you pay and the more you’ll end up paying for the loan overall.
“You really don’t want to go into default on your loans because with federal loans, they can intercept your tax refund or your social security,” says Harzog. In the event that you go into default of your student loans it will go on your credit report. In addition, the lender might turn your student loans over to a collection agency and you will lose your federal benefits such as interest rate reductions and deferment and forbearance options. Also, you will no longer be eligible to receive any additional financial aid until the loans in default are paid.
Harzog stresses that when you first get out of college this is a great way to a very good credit history. So keep it clean by:
* Knowing the terms of your loans, including grace periods
* Making your payments on time
* Talking to your lender if you run into problems
* Limiting the amount of debt you accrue (Those credit card bills can rack up quickly.)
* Paying cash for things
Please, please, please don’t go into default. You have options out there for you to consider.
Your Mission:
If you are in fact having a bit of financial difficulty then you need to consider the above options. Sit down and have a hard and honest look at your financial situation and see what is possible.
Having trouble getting started?
I’d love to help you in finding out what your options are and how to get you back on track. I offer coaching for all stages of your twenties. Visit the coaching page to find out how we can get you started toward financial freedom.
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