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.
Loan Repayment Options
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 are looking for a solution to your student loan problem and wondering if there is one, then there is a great way to find out for free! Just click here to provide me with all the details on your loans. I will then, for free and with no obligation on your part, look at your situation to see if I can provide you with a way to deal with them. If there isn't one, it didn't cost you anything. If there is, then I will contact you to schedule an analysis session with my office to lay out a plan of action.
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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