The burden of overdue student loans looming over your head can stressful, to say the least. It is enough to cause you to lose sleep at night—and, by day, to live in fear of bills and of phone calls from debt collectors. I have worked with many people in your situation whose lives have been transformed because of their frustration when it comes to student loan obligations. But this frustration can lead to a mistake that is easily avoided and can worsen your situation if you make it.

Biggest Federal Student Loan Mistake

Federal student loans are unique, yet many people treat them as any other loan. This leads to the number one mistake people make when it comes to their federal student loan debt in New Jersey: Allowing the loan to default without taking action.

These loans take 270 days to default, so you do have some time to take action. But if you don't, and it defaults, you are faced with a damaged credit score, a higher loan balance due to an 18.5% default penalty, and debt collector fees. By taking the action discussed below, you can avoid these complications.

Actions You Can Take to Prevent Default

Here are a few options available to you before you let your student loan default.

  • Put your student loan on hold. There are a variety of ways you can postpone your student loan. This is called deferment or forbearance. The conditions when you may use either of these options—as well as the application process—can be bewildering. I can help put your student loan on hold to help buy you time to get into a more affordable payment plan.
  • Apply for administrative discharge. Cancellation of your loan completely sounds like the ideal situation, but it can be difficult to obtain. Applying to have your student loan forgiven should also be done together with your attorney.
  • Consolidate your loans. For students with FFEL loans, consolidation can make you eligible for more payment options.
  • Income-Driven Repayment Plans. One great benefit of federal loans are repayment plans based on your income. These can help you get a more affordable monthly payment.

Is Default Creeping Up on You? I Can Help!

Fixing this student loan issue is much easier if it is done within 270 days. Before you make this number one mistake, you need to take action. Even though it is not a long term solution, a deferment or forbearance can buy you time to come up with a permanent one.

If you live in Burlington, Camden, Gloucester, Salem or Cumberland County, please feel free to contact me to learn more about how you can avoid the damaging consequences of student loan defaults. As a New Jersey student debt attorney, I will work with you to help you find the best solution for your situation and get you on the road to financial freedom.

Pick up the phone and call me today at (856) 432-4113, and we’ll see if you can sleep more restfully tonight. If you would like more information about student loans, you can download my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

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