How to Avoid Defaulting on Student Loans

Understand that you are not the only one who has fallen behind on their student loans. There are many options available to you, and thousands of Americans struggle each year to repay their defaulted loans. You will soon be on the road to paying it off by selecting the option that best meets your needs.

When coping with the hardship of these kinds of loans, loan rehabilitation is a choice to take into account. You must first speak with your guarantor before you can sign up for a rehabilitation program. It’s crucial that you make at least nine timely monthly payments to your lender after enrolling. Your loan will be rehabilitated after you have signed and returned the rehabilitation agreement and received a formal notification.

Then, your loan is transferred to a new lender and servicer, where it will be rehabilitated and will no longer be considered in default. You must make regular payments to your new provider and pay an interest rate of up to 18.5 percent on the loan.

Another choice for repaying defaulted student loans is loan consolidation. You must have a good repayment plan in place before being accepted into a loan consolidation program. You accomplish this by paying your current lender three times in a row.

The US Department of Education’s leading consolidation program at the moment is the Direct Loan program. Consolidation and rehabilitation of your loan have significant differences, including the fact that with rehabilitation the default status is removed from your credit report while it is not removed with consolidation.

Paying off the debt and any interest you owe in full will allow you to exit your defaulted student loan situation the quickest. Although it might not be the case for everyone, paying off as much of your loan as you can can lower the amount you must pay after interest rates are applied to a program. If certain conditions are met, you may be eligible to have your defaulted student loan reduced or forgiven.

Although there isn’t a quick fix for paying off student loans, loan forgiveness programs can be very helpful. Using loan forgiveness programs will put you on the path to paying off your student loans at your own pace, relieving you of the burden of making large monthly payments.

Check back frequently on our blog, which is accessible from the resource box, for additional advice and details on paying off your student loans.