As the nation sees an increase in the pricing of nearly everything, college is certainly no exception. People are struggling to make ends meet and send their kids to college. But there is also another factor involving college that has become a problem for many families and that is keeping up with existing student loan payments from college years of the past. Even those people with a college degree may find it difficult to get or keep a good, stable job right now. Without a solid income to make ends meet and pay off debt obligations, It’s likely many will fall behind on payments. Doing so can really hurt your credit score and ruin your chances for securing a loan or other financing in the future. The student loan is no exception. What Constitutes Default? If you miss nine straight months of payments to your student loan company, your loan is considered in default status. If this happens, the lender will likely turn your debt over to a third-party collection agency and you will incur stiff penalties and fines until the debt is paid in full. This can be a scary situation because for many of us, our student loans already run in the thousands of dollar range ad with the addition of other fees, you are likely to end up responsible for paying much more than your originally owed. The student loan lenders are legally entitled to garnish your wages once you default and you can forget about seeing an income tax return until the debt is settled in full. You will also be refused opportunity to obtain more financial aid in the future. There are two options you can pursue if you find yourself falling too far behind. Take a look at what choice may work for you:ForbearanceIf you are in an emergency financial situation, you can apply to request a forbearance period on your loan. You will responsible for paying all interest that has accrued during the timeline of forbearance. A forbearance period can only last for a one year period or even less time. The forbearance time can be renewed for up to a total of three years. If you have loans subsidized through the government, you are still responsible for paying back the accrued interest. DefermentA deferment on a student loan is essentially temporary stay from having to pay your debt back. If you have subsidized loans through the government, you are not required to pay back the interest, unlike with forbearance. You will need to apply for a deferment in order to be approved. Until you are in fact approved, you will still need to make on-time payments each month on your accounts. If you have already defaulted on your loan, a deferment approval will not be permitted. While the options are available, not everyone will qualify for the assistance. The application approval will be dependent on your income and debt ratios, the reason for your financial hardship, and your current employment status. If you are facing the default of your student loans, or even if you already know you will have difficulty making payments monthly, contact your student loan lender immediately and find out what steps you can take to keep your loan in good standing and make arrangements to apply for one of the above alternatives.
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