Tips For Managing Student Loan Debt

Options For Student Loan Debt Abound

The good news is that even though student loan debt is not dischargeable in bankruptcy, it does come with its own set of built-in protections for those who find themselves unable to pay. All federal student loans are subject to deferment, forbearance, and income-based repayment options, and many private loans must feature these same kinds of options, so even if your income takes a nosedive and you begin to consider bankruptcy, there may be a way to lower your student loan debt payments outside of the bankruptcy court.

If you have lost your job or are facing other hardship, contact your lender about deferment options. Deferment postpones payments, but the loans continue to accumulate interest, so it may be best to try to make the bare minimum payments. On the other hand, federal student loan debt has a much lower interest rate than most other debt, especially credit card debt, so you should focus on the higher-interest debt first.

Whatever happens in your financial life, you should never let your student loans go into default. When student loan debt goes into default, the entire balance of the loan becomes payable immediately! Suddenly finding yourself staring at a $20,000 bill is nothing anyone should have to deal with. Additionally, the government can garnish wages and withhold tax return dollars for a defaulted federal loan. Federal loans go into default nine months of non-payment. This means that even one little payment in a nine month span will prevent the loan from going into default! Keep this in mind if you are struggling to make payments and considering bankruptcy.