Did you know that the average student will graduate this year with $35,000 in loan debt? Most of these students will have a very difficult time paying back this debt. If you are one of the students struggling with the heavy burden of student loans, you are not alone! Many college graduates face high student loan bills, frequent calls from collection agencies, and a poor credit score because they have not repaid their loans on time.
It is clear that anyone in such a situation feels helpless and hopeless. Moreover, student loan debt is one of the biggest factors that causes people to put off things like buying a house or even having children. But there is good news: there are some ways to get on with life and pay off student loan debt. However, this is not always easy. Here are some of our best tips for you:
Settling federal loans:
You can’t negotiate a federal student loan. However, it’s a little easier to defer payments on these loans OR opt for some sort of “income-based” disclosure. Can you reduce the actual amount of federal debt you owe? No. Is there anything you can do if you default on a federal student loan? Yes. You can negotiate a repayment plan to reduce the burden.
How can you negotiate a good repayment plan? Talk to the collection agency and find a plan that works for you, but keep in mind that it will be difficult to negotiate anything if your debt has already been litigated in court. The only way to weasel out of a court case is to enlist the help of an experienced attorney in your state, and you will absolutely need one if a federal lender has requested to garnish your wages or tap your bank account(s).
Private lending: be careful:
The area of private lending is tricky. If your debt has not yet been sold to a collection agency, you may still have some bargaining power. In most cases, however, the discount you can get on a private loan is minimal. And if your debt has been sold to a debt collector? Well, you still have some bargaining power, and most debt collectors will readily make you an offer. But it’s important to pay attention to what offer you actually receive.
Is the collection agency offering you a legitimate discount or simply waiving the interest and other fees that have accrued over the last, say, five years? Would it have been better to simply make the minimum payments and reduce the debt? Possibly. You need to weigh the deal in front of you. Also, keep in mind that while a collection agency may make you a favorable offer, you will have to pay the amount in full; installment payments are usually not an option when a collection agency makes you a favorable offer. Be very careful and ask questions.
Will you be sued?
If you have defaulted on a private student loan, you will likely receive a legal document. In this case, a court may decide that you need to pay back part of your loan, but it depends on how much you earn and owe. If you have been served with a notice, be sure to hire an attorney to help you out of this situation. It is usually possible to get out of this type of debt, but it depends on several factors. It is best to speak with an attorney about your situation and your options.