If you have adult children or grandchildren who are struggling to repay student loans, they are not alone. There are ways to deal with student loan repayment, but most students need information and guidance to know how to deal with the problems. Ignoring the loans and letting them go into default can have major financial repercussions down the line.
It's a shame that the same colleges that are happy to help students apply for loans are not as good about helping students repay their loans. Students often run into challenges when it is time to repay loans, according to a recent article in Forbes, "How to Tackle The Top Three Student Loan Issues." If the student has a job that isn't paying enough to allow them to pay back a loan and cover living costs, they need help figuring out what to do. Still others go to graduate school, in part, because they know that they can get a deferral on loan payments. But then they graduate and have even more student loan debt.
Students need to make sure they know their rights.
A loan servicer must respond to requests for more affordable income-based repayment plans. Under the federal loan program, a student has numerous options that can help with loan repayments. The article points out some of the most common issues and how to tackle them:
Federal Loans Made by Private Lenders. Private loans are under the same repayment requirements as the federal program, but anything involving a federal loan entitles the student to some breathing space. Payments can be based on income or gradually increased. There are provisions in the event the student becomes disabled, out of work, or is going back to school.
Don't Fall into Default! Even if you're not making any payments, do what you can to stay out of default status. The Consumer Fraud Protection Bureau found that one in five students were in a no man's land of not making payments, yet not into default status, which triggers the collection process. There are about four million borrowers in default. The article advises to find a workable repayment program before this happens.
Find Out More About Repayment Options. The federal program can alter loan terms, and a student can consolidate loans to save money.
It is critical to find out what your rights are and then take action to protect your financial life. Paying back student loans can be overwhelming, but hiding and hoping this goes away will not work.
Reference: Forbes (November 18, 2015) "How to Tackle The Top Three Student Loan Issues"