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Thinking of Renegotiation for Student Loans

Are you currently facing the problem of unable to pay back your student loan in time and worried about the Department of Education is going to take your tax refund, freeze your salary or take legal action against you?

student loan debt

You should know that declare bankruptcy is not going to get rid of your student loans due to the recent adjustments to the law. By exploring the options and get along with may help to remove the problem in advance of any kind of damage is made to your bank account or credit score.

The first thing that you need to do is to make sure that you are continuously making payment for your student loan. If you do not pay back your student loan or trying to renegotiate payments over the last 180 days, you may be in default.

If this is the case, your loan company will not go to renegotiate your student loan. But, you are still able to ask your loan company to come out with a workable schedule of repayment for you. The loan company will check on the information that you provide to them, such as unpaid bills, monthly income, dependents, other debts, and so on. As soon as you repay all your default payments as agreed for 180 days, you can then be qualified for a new loan application.

Deferment of Student Loans

If you are not in a default situation, then you may probably have “deferred” for your student loans, which mean your repayment been delayed in case you:

  • either permanently or momentarily disabled
  • are enrolled in college
  • are being unemployed
  • are offering medical treatment in a poverty area
  • got a federal loan and able to provide evidence in which you’re enduring a tough economic situation
  • are serving full time in the military

You are required to submit documents from your loan company and follow up to ensure it is prepared appropriately. By incorporating loans, you will expect the loan interest to always go up.


Forbearance on Student Loans

In case you are not entitled for a deferment, then you may want to extend the installments of your student loan for a specific period of time which is known as “forbearance.” You are going to get a forbearance easier compare to getting a deferment, but you still will expect the interest is still carry on and keep rising even within the forbearance period.

Canceling Your Loan

You can probably request that your lender cancel your student loan entirely if you:

  • either permanently or momentarily disabled
  • are working in law administration with having certain loans
  • are serving full time in the military
  • are offering particular types of community service, like serving in the Peace Corps
  • are teaching in a poverty area or giving education to needy students
  • are offering medical treatment in a poverty area
  • withdrew from college or the college shut down before you get your degree and you didn’t get any refund

Refinancing or Renegotiating

If you are not in default and do not entitle for deferment, forbearance, or cancellation, you are still able to renegotiate a completely new repayment plan that could be workable along with your existing financial situations.

Once you extend the loan repayment period, the more interest you are going to pay for the loan. You can have some repayment plans provided by loan company like:

  • Graduated repayment, where you start out by having lower payment and the repayment amount will be raised every few years. As long as your income will keep increasing in the future, this can really be workable.
  • Extended repayment, where the fixed amount of monthly repayment that goes longer than the period of your existing loan as some can goes for 30 years.
  • “Income-sensitive repayment,” which is going to fluctuate along with your income and normally is calculated annually.

Debt Consolidation

You can just consolidate together all your student loans with a renegotiated rate. You are going to expect to pay for more interest once the period for you to repay your loan is extended, however, there is also an opportunity for you to get a lower rate of interest to balance it out.

You need to know that most debt consolidation loan lenders will not consolidate student loans with a total amount of less than $7,500.

When you choose to consolidate all your student loans, you must make sure that you are able to make the payments of your loan without a penalty.

For people who are unable to repay their student loans, they should come out with a workable plan before getting in default and damaged their credit score. The sooner you take action and find the workable solution to settle your student loans, the better you are going to be.

Generational Approach of Student Loan Debt

The best way to get out of debt is to stay out of debt to start. Start your kids off on the right path to a sound financial future by teaching them the harsh realities of student loans, and even plan to avoid them entirely.

The ever-growing cost of tuition has made it increasingly challenging for the average household to pay for education without assistance. The total student loan debt in the United States has grown to over $1 trillion and continues to grow at 10 percent a year, with the average student debt ranging around $25,000 a person.

Some believe that student loans are a worthwhile “investment” in the future—and for some careers, a college degree is exactly that. But with the rate of interest on student loans higher than ever, a student loan will take even more years than previously to pay off.

This means that your college hopeful will start off their adult life, before they even have a paying job, facing down thousands of dollars of debt. Rather than setting up a secure financial future, student loans can put that security in jeopardy.

Shocking, isn’t it? Consider alternatives, some mentioned in this blog, on finding ways to finance post-high school studies.

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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