If you are one of the 7 million people who have defaulted on student loans in the United States, it is likely you might not even know where to start to begin the process of getting it back on track. Failing to pay your student loans can financially set you back in many ways such as:
- Withholding your tax refund
- Garnishing wages through your paycheck
- Federal benefits withholding
- Driver’s license suspension or loss of job in some states
- Preventing a home purchase
- Decrease in credit score creating an increase an budget for loans, insurance, etc.
63% of student loan borrowers have delayed buying a home because of the debt while 30% have moved back home with mom and dad.
So what steps do you need to take to create a plan?
1. Find out how much you owe and who you owe it to.
Create or retrieve your FSA ID
When you are able to login on this site you can find out your loan servicer and loan amount. Total up your student loan debt and find out your interest rate.
2. Do your homework. Find out what plan works best for you and your situation.
There are several different repayment options. Use the link below to determine which one is right for your situation.
3. Apply for a loan consolidation and an income based repayment plan or a rehabilitation loan
This will bring your loans current and make your payments more affordable with an end date, where any remaining balance is potentially forgivable. Remember the consolidation is only available one time and the rehab is available one time. If you run into any problems in the future contact your loan service provider right away to see what options are available before you default.
4. If loan consolidation or loan rehab are not possibilities, check to see if you qualify for a loan cancellation
This is cancellation due to a current disability or a closing of a school you attended. Depending on your profession, you might have the ability to get a portion of it forgiven or you might be able to look into a home refinance where you can consolidate the student loans into your mortgage without an adjustment to the interest rate for taking cash out.
The important thing to remember is it is easier than you think and there are multiple options available to you that can help you in finding a solution to ridding yourself of the student loan burden you have been carrying. Start today with creating your plan of attack with the easy steps!