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If you have a high amount of student loans that you are struggling to pay off, then you may have questions about how to handle it. There are provisions with most types of student loans that allow you to defer payments or adjust payments to meet your needs. Check with your lender for specifics. Here, we will discuss common options when it comes to paying down your student loans.
If you are really in over your head and have considered bankruptcy, be prepared. Bankruptcy is not an option for federal student loans. They will not go away or be discharged even if you are filing bankruptcy. You do have some options though. You can apply to change the pay off terms of your student loans. Instead of struggling to pay them off in ten years, you can stretch them out to thirty years. This, of course, would end up costing you more interest in the long run, but it could relieve the stress of large monthly payments. If you're missing payments because they're too high, then it will end up costing you more anyway, not to mention that you can ruin your credit by missing payments.
Filing bankruptcy with a private student loan is not any better. There is a provision for undue hardship, but the standards are extremely hard to meet. If you can meet the requirements, then it is possible to get a private student loan discharged. This provision is very rarely awarded. You should consider different ways of paying off your student loans if possible.
One option is to talk to your lender about a graduated repayment plan. This plan allows you to start out at low payments that steadily increase over time. This gives you some time to build your income up to a point where you can afford the larger payments. Payments are figured generally once every two years, so you have some time to prepare when the payments increase.
Another option is setting up an income based repayment plan. This plan uses your adjusted gross income each year to figure the payment that you can afford. The payment is based also on the size of the loan. How many members you have in your family is also taken into consideration. Many find this a very effective way to budget for student loan payments.
In times of extreme hardship, you may qualify to defer your loan payments. This doesn't mean that they are discharged or gone, but simply put off until a later date. Many types of student loans will not have interest accruing during the deferment period. If you don't qualify for deferment, you may qualify for forbearance. Forbearance is like deferment, in that you can postpone payments for a set length of time. Unlike deferment, forbearance options do accumulate interest during the period that you are not making payments.
In general, you should try to pay off your student loans whenever you come into extra money. All debts need to be taken seriously and you should always pay as much as you can afford. If you are in some trouble and need to change the terms or put off monthly payments for a while, contact the custodian of the loan. Manage it well, and you can be on your way to paying off your student loans.
About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation.
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