Education is an essential stepping-stone for your entry into the workforce. Whether you aspire to be a doctor, lawyer, teacher, or other professional, obtaining a college degree has all but become a mandatory prerequisite. This importance of education combined with rising tuition rates means that you are likely to leave college with hefty student loans.
Student loans have become the new norm. Nearly 70 percent of students from the Class of 2018 have student loans they need to pay off, with the average debt totaling $29,800, according to Student Loan Hero. Nationally, “Americans owe over $1.56 trillion in student loan debt, spread out among 45 million borrowers.”
Of those 45 million individuals still grappling with student loans, 11.5 percent of them are more than three months late on payments. These people must take on the extra burden of late fees and lower credit scores…and the problems only get worse as you miss more payments.
If you default on your student loans for more than nine months, the most severe consequences are instituted. Some lenders will demand you pay the entire balance in full, and you may become ineligible for repayment programs or future financial aid. You may even find your wages garnished, your bank account levied, and liens placed on your assets and property.
Fortunately, there are ways to tackle your student loan problems before they get out of hand. When you don’t know where to turn, a student loan attorney can be exactly the resource you need. They will assist you in understanding your options to manage your student loans and developing a strategy that minimizes damage to your current and future financial well-being.
Contact Your Student Loan Lender
If you fall behind on your student loan payments, even by one day, it can lead to negative repercussions. The best possible course of action is to recognize the potential delinquency and reach out to your student loan lender. Some lenders are willing to work with you, so being proactive and transparent about your situation can go a long way.
For instance, you may be able to have your monthly payments delayed if you recently lost your job or had serious medical issues. You can obtain this result through deferment or forbearance. Other income-sensitive negotiations may be possible, though, so whatever you do, don’t stop making payments and then neglect to try talking with the lender.
Consider Consolidating Your Student Loans
The process of consolidation means turning all of your federal loans into one. A lending institution will handle the loan, and it requires a single monthly payment. There are many other reasons why you should consider consolidation, which include:
- No minimum or maximum debt amount needed to qualify
- Protects your credit score
- Payments can be made automatically
- You may be eligible for loan discounts
- You can change the terms to decrease monthly payments
- Fixed interest rates
- Several repayment options, so you can select what works best for you
- Minimizes your chance of default
While these are all the pros of consolidation, there are some potentially negative impacts to consider as well. For instance, loan consolidation means you will pay more interest over time. Plus, that interest rate is roundedup. There is also no grace period, nor will you be eligible for certain lender benefits.
Consider Filing for Chapter 7 or Chapter 13 Bankruptcy
Most people aren’t able to discharge their student loans through bankruptcy, but that does not mean the avenue is not worth exploration. To qualify for student loan forgiveness, a debtor must pass the three-pronged Brunner test. That means the former student is:
- In Poverty – This is determined from the debtor’s assets, income, and expenses. Simply put, the debtor would be unable to maintain a decent standard of living if they continue to make loan payments.
- Persistent –The loans have no foreseeable end, even if the debtor continues to make monthly payments on the interest and principal.
- In Good Faith – The debtor is making a reasonable and concerted effort to pay back the money lent to them.
Learn More About Student Loans
Regain control of your financial situation and put student loans in check. Knoxville Bankruptcy Attorney firmly believe that you should not have to scrounge to make ends meet because of student debt. That is why we will do everything in our power to ensure you are properly represented in all matters related to student debt.
Start exploring the possible ways to relieve your financial burden. Thanks to the experience and insight of Charles Pope and Olive Cisowski, you can be confident that the path you chose together will be the best one for you. Set up a consultation with our student loan attorneys today by calling 865-276-8109.