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Guide to Getting Information on Student Loans

According to a recent report by the Federal Reserve Bank of New York, the amount of student loan debt in America has surpassed both auto and credit card debt, making student loan debt the largest form of consumer debt outside of mortgages. As student loan debt has grown, so has the delinquency rate. If you are one of the many Americans struggling to pay off your student loans, you should educate yourself about repayment options available for both federal and private student loans. To help you get started, here are some tips for getting information about your loans, and what options may be available to you.

What options are available and how you pursue them will depend on whether your loans were obtained through the government, or through a private lender. Let’s look at federal loans first.

If you have a Federal Loan(s):

  1. Gather information about your loan either online or by phone:
  2. Research Your Options - You may be able to temporarily postpone your monthly loan payments through a forbearance or deferment under certain circumstances such as economic or temporary hardship, school enrollment, or military deployment. Federal loans have many modified repayment programs available. Ask your federal student loan servicer(s) to discuss various options including:

    Income Based Repayment Plans: are designed to set payments based on income, family size and in some cases, loan amount.

    Extended Term Payment Plans: if you have more than $30,000 in outstanding federal loans, this plan allows you to extend the repayment term up to 25 years.

    Direct Consolidation Loan: allows you to consolidate (combine) multiple federal student loans into one loan. The result is an extended repayment term and single monthly payment instead of multiple payments.

  3. If your federal student loans are in default, you may have the option to rehabilitate or consolidate your loans. To rehabilitate your federal loan, you must establish a payment agreement with the responsible collection agency. Typically, after nine consecutive payments your loan is back in good standing. You can also apply for a consolidation of your defaulted student loans.
  4. When contacting your federal lender make sure you are thorough in investigating your options and inform them if any of these situations apply:
  • If there is more than one child in the family – family size can help acquire benefits.
  •  If active duty military, inform your lender immediately. There are repayment programs designed specifically for military service members.
  • If making payments are difficult – hardship programs may be available.
  • If your hardship is temporary – ask if there are any “interest only” programs available that could lower your payment until your situation improves.

If you have Private Loan(s):

  1. For private loans, you should contact your lender to obtain balance, interest rates, and loan status. If you have not previously used your lender website, create an online account or call your lender directly to investigate repayment options.
  2. You may be able to temporarily postpone your monthly payments through forbearance, deferment, or hardship under certain circumstances.
  3. When contacting your private lender about your private loan repayment, you may want to inquire about modified repayment options such as:

    Graduated Repayment- your lender may allow lower payments for a limited amount of time that increase typically after 1-2 years.

    Interest Only Payments- some private lenders allow you to pay only the interest on your loan for a limited amount of time. This option may extend the time you repay your private loan.

  4. If your private student loans are in default, you may have the option to rehabilitate or consolidate them.  Some financial institutions now offer private loan consolidation. A partial list may be found at www.finaid.org.
  5. Your lender may allow you to rehabilitate a defaulted private loan. A temporary payment agreement may be available to get your loan back in good standing.

Continue to manage your loans

As your situation changes so may the options that are available to you. Therefore, it is a good idea to periodically check with your lenders as to whether there are any new programs available of which you may be able to take advantage.

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