How to Avoid Defaulting on Student Loans


When trying to avoid defaulting on a student loan, preventive medicine is always best. By exercising early initiative, you can choose from a variety of options that may avoid any negative notations ever being placed on your credit report. Currently, there are a many various programs that can allow you to avoid default.

Deferment: A deferment puts your payments on hold and may be granted for graduate school, half-time study, unemployment, economic hardship or a variety of other reasons.

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Forbearance: Forbearance is another option that is available for those who do not qualify for a deferment and allows you to either reduce your monthly payment or put your loan on hold.

Graduated Repayment: As the name implies, this enables a borrower to make smaller payments early in the repayment process when disposable income is typically not as available, and larger payments at a later date when earnings are probably greater.

Income-Based Repayment: Both FFELP and direct lending (FDLP) offer repayment plans that allow borrowers to pay back their loans as a small percentage of their income.

Consolidation Loan: This loan is designed to help borrowers consolidate several types of federal student loans with different repayment schedules into one loan with one monthly payment.

Discharged: A loan may be canceled due to death, permanent and total disability, bankruptcy (in some cases), or inability to complete a program of study due to school closure or false certification by the school.

Under FDLP, if none of the existing repayment options meet your needs, you can seek out a special arrangement by contacting the Secretary of Education, Borrower Service: www.ed.gov

Defaulting on student loans should be avoided at all costs, because a default will cause your tax refund to be confiscated, and will prevent you from becoming approved for any other government funded loans. There are several options available that can help you avoid defaulting on the student loans you have, no matter what your financial position is.


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