scag kuznets: What Are Your Options If You Can't Pay Back Student Loans ...

Sunday, March 11, 2012

What Are Your Options If You Can't Pay Back Student Loans ...

If you?re thinking about going to college and you?re wondering how to pay for it, there?s good news and then there?s an extreme word of caution. While there are financial aid options available in the forms of student loans, one thing that a lot of people learn the hard way is that loans, even when they come to one?s education, are not free money. They are financial agreements that we make with the government stating that if they give us enough money for school, we will pay it back.

Of course, it?s a lot easier to take thousands of dollars from someone than to return it to them and so sometimes people find themselves in situations where they can?t pay their student loans back. That is a serious predicament to be in (the only thing more credit-affecting would probably be not paying your taxes), but there are some tips on how that kind of financial obstacle can be overcome.

Reach Out to Your Lender

Have you ever had anyone owe you money before that didn?t pay up? Then, to make matters worse, they stopped talking to you. A lot of loan lending companies can definitely relate. Although they do want their money (and for the majority of us, there is no way around repaying it), perhaps their bigger issue is that they want to make arrangements with you regarding payment. No matter your current financial situation may be, make the time to contact your lenders to discuss what compromise can be reached.

Defer or Forbear

A very popular way of dealing with the inability to pay a loan is to see if you can have the loan deferred. Some examples of when you may apply for a deferment (which is basically some time off that you are given from paying back your loan) are if you are going back to school or you?re unemployed. Suppose, for example, that you are going to school to get an online criminal justice education degree. The benefit in a deferment is that it offers you a grace period to not just make payments on the loan, but also the interest that?s accruing. If you can?t get a deferment, the next option is to apply for a forbearance. This also gives you some time to pay back your loan, but the interest will still be applied in the process. Forbearances, in general, give you about a month before you have to start making monthly payments back again. When it comes to either option, proof for the need of a delay in loan payments will be required.

Ask About Cancellation Qualifications

There are rare occasions when a student loan can also be cancelled. Just as with a deferment or forbearance, there will have to be evidence supporting the fact that you are unable to pay the money you owe back. Some of the circumstances for which a student loan cancellation will be considered are obviously if the person who borrowed the money has died; others are if they are suffering from a disability, they are unemployed, they are serving in the Armed Forces, they are performing community service or teaching in a needy community, they are a victim of identity theft or they left school and never received a refund that ironically was owed to them.

No matter what your situation may be, a signed loan is like a promissory note and if you don?t keep it, it (and the stacked up interest) can follow you for years to come. If you are in a position where you can pay your student loan back or set up a payment arrangement, by far, that is your best option. If you can?t, make sure to stay in communication with your lenders. Both you and your credit will be glad that you did.

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