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Information and Advice if in Trouble with Student Loans - The Bills.com Blog
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Information and Advice if in Trouble with Student Loans
Question: Hi, I'm in a bit of a crisis. I recently just graduated in December and my grace period is up and its time to start repaying my student loans. Because of economy I had to accept a job that does not pay very well. As a result I had to defer my federal and private loans ( I owe 100,000 total, including interest) I borrowed through Sallie Mae, whichunfortunately as of May 2008 they stopped offering borrowers the option to consolodate our loans. Even though my total balance will be higher if I consolodate, I have no other option to lower my monthly payments. So my question is there any way I can transfer my balance to another lender so I have the option to consolodate? I just took a second job to start saving so when I start repayment in January my monthly balance will not completely wipe out my savings. p.s. I do plan on making monthly payments on the accrued interest.
Answer: Unfortunately, many students are finding themselves in the same position as you after graduation, unable to find a good job but forced to begin making payments on their extensive student loan debt. The recent downturn in the economy, coupled with changes to the laws regulating the interest rates and fees charged by lenders, have caused many lenders to stop offering student loan consolidation programs, including Sallie Mae. Thankfully, there are lenders who still offer consolidation loans. You are not required to consolidate your loans with your original lender, so you should be able to find other lenders willing to consolidate your loans. Also, the federal government has a program through which it will directly fund the consolidation of borrowers’ student loans–you can find out more about this federal program by visiting http://www.loanconsolidation.ed.gov/.
To learn more about student loans and consolidation programs available to borrowers, I invite you to visit
http://www.bills.com/student-loans/. In addition, if you submit your contact information on the Bills.com website at https://www.bills.com/studentloan/loan/, we can have several debt consolidation providers contact you to discuss the options available to you.
Besides consolidation programs, most student loan lenders offer various programs to graduates struggling to repay their loans. For example, many lenders offer some type of “hardship deferral” allowing borrowers to skip payments for a certain period of time, usually for a few months. In many cases, lenders will allow borrowers to defer their payments several times in a row, providing borrowers with a year or more without payments to help borrowers become financially solvent. In my experience, student loan providers are quite flexible in working with borrowers who are struggling to make their payments. However, you must be proactive in communicating your difficulties with your lender, as the lender may be unable to assist you once your loans become delinquent or go into a default status.
Due to recent changes in the laws regulating student loans, some students find that consolidation is not a financially sensible solution to manage their student loan debt. Before you decide to consolidate your loan with another lender, I encourage you to contact Sallie Mae to discuss your financial difficulties and find out what options the lender can offer you to help lower or defer your payments.
Then contact consolidation lenders to discuss the interest rates they can offer you on your consolidated loans, and how the rates and terms compare with those on your current loans. You may find that your current loans are actually charging you a comparable or even better rate, depending on when your student loans were taken out; loans taken out more recently tend to charge a lower interest rate than older loans. Newer loans usually also have a fixed interest rate as opposed to those loans made before mid-2006, which generally have an adjustable interest rate. To read more about the current status of consolidation loans, you should visit http://www.smartmoney.com/consumer/index.cfm?story=20080414-sallie-mae. Basically, you need to speak with various consolidation lenders to determine if the loan terms they can offer you are better than those you have on your current loans.
As I mentioned previously, my past experience with student loan providers has shown them to be relatively flexible in assisting borrowers who are struggling to repay their debts. However, you must communicate you difficulties to your lender as soon as possible to prevent you loans from going into default, which can make deferring or consolidating your loans much more difficult.
I hope that the information I have provided will assist you in resolving your outstanding student loans and help you Find. Learn. Save.
Best,
Bill
www.bills.com/blog/
Also, make sure to get a free financial health check-up with Bills IQ!
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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
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