There isn't a lot of good news when it comes to student loan debt these days. The average balance at graduation is around $27,000, total debt nationally is higher than credit card debt, and it is extremely difficult to discharge in bankruptcy.
However, if you have loans guaranteed by the federal government, either through FFEL, Perkins, or the Ford Federal Direct Loan program, there is some good news.
There are many programs that can help you to pay your loans, even if you are in default. In fact, unlike most other loans, you are only in default if you have not made a payment for more than 9 months (270 days). Until then, you are merely delinquent.
Lowering the monthly payment is the key to affordability and getting back on track. Unless you opted for something else when the loan came due, you were placed in a ten year repayment plan with a fixed monthly payment.
However, there are options available that can lower your payment and/or stretch out the repayment term past 10 years. They are:
- Graduated Repayment Plan (payment starts low and steps up every 2 years for 10 years)
- Income Contingent Repayment (Considers income and loan balance, and can stretch term to 25 years)
- Income Based Repayment (Considers only income, and can stretch term to 25 years)
If your loans total more than $30,000, then there are two plans available:
- Extended Term (Fixed payment over 25 years)
- Graduated Extended Term (payment starts low and steps up every 2 years for 25 years)
You are also not locked in to any one plan once you choose it. You can change it at least once per year. Thus you have the flexibility to choose a plan that meets your current financial situation.
So What Can I Do?
If you live in southern New Jersey and would like some assistance in finding the right payment plan for you, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your options.
If you would like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.