I recently wrote that Americans now owe more on student loans than credit cards. Given the nation's high unemployment rate and slow economic recovery, it's not surprising that the default rate on student loans also is up. (The default rate for students who entered repayment between fiscal years 2006 and 2007 was 6.7%, the highest since 1998.)
There are ways to ease the burden of student loans. But if you've already starting missing payments and are in default (or expect to go into default soon), Jane Bennett Clark offers these strategies in the upcoming October issue of Kiplinger's Personal Finance:
Miss a single payment on a private student loan and you will go into default. Miss a few federal-loan payments and you will get dunning phone calls, but you won't go into default until after you have fallen 270 days behind schedule. Once that happens, the feds can demand immediate repayment of the full balance of the loan and wring payments from you by offsetting tax refunds and garnishing wages. Don't think Uncle Sam will drop the matter. The feds can and will stalk you indefinitely.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can rehabilitate both your loans and your credit, however, by making at least nine timely payments in amounts deemed "reasonable and affordable" by you and the creditor. (Be prepared to differ on what that definition is.) With the payments under your belt, your credit record is wiped clean, and you can enter an income-based program.
Or consolidate your loans with the Direct Loan program, which gets you out of default and into an income-based program almost immediately. The downside: The delinquency stays on your credit report. For more information on strategies, see www.studentloanborrowerassistance.org.
-
Thanksgiving 2024: How Grocery Taxes Impact Your Holiday Food BudgetFood Prices Some families are navigating high food prices influencing what’s on the table this Thanksgiving.
-
9 Year-End Money Moves to Make NowBoost your retirement savings, lower your taxes and get the most out of your health insurance.
-
Five Ways to Save on Vacation Rental PropertiesTravel Use these strategies to pay less for an apartment, condo or house when you travel.
-
How to Avoid Annoying Hotel Fees: Per Person, Parking and MoreTravel Here's how to avoid extra charges and make sure you don't get stuck paying for amenities that you don't use.
-
How to Appeal an Unexpected Medical Billhealth insurance You may receive a bill because your insurance company denied a claim—but that doesn’t mean you have to pay it.
-
Amazon Prime Fees Are Rising. Here’s How to Cancel Your Amazon Prime MembershipAmazon Prime Amazon Prime will soon cost $139 a year, $180 for those who pay monthly. If you’re a subscriber, maybe it’s time to rethink your relationship. Here’s a step-by-step guide to canceling Prime.
-
How to Haggle for Almost AnythingSmart Buying Learning how to haggle is an invaluable skill. These strategies will help you negotiate a better price for just about any product or service.
-
Disability Insurance Can Provide COVID CoverageCoronavirus and Your Money If you are concerned about long-term complications from COVID-19, consider disability insurance coverage.
-
21 Things You Can't Return to Amazon — Either Online or In-StoreDid you know there are things you can't return to Amazon? Before tossing these items into your shopping cart, be sure to read Amazon's return policy first.
-
How to Avoid a Charity Scampersonal finance Scammers never quit, even when you're trying to be altruistic. But you can avoid getting duped if you do your homework.
