College students are living in the present with no thought of tomorrow…until they commence nearing graduation day. That college education came at a price and now graduates have to embark thinking about how they are going to pay off their student loans. Students may have trouble finding a job after graduation or a job that provides enough income. Students will default on their loans if they do not make payments for 270-360 days. This does not mean that there are no payment options available to make these debts affordable. The federal government has provided many ways to pay off your loans and these options should be explored before it is too late.
Defaulting on your loan means that you are no longer eligible for deferment, so you need to make sure that you apply for payment options before you reach default. All students have a six-month grace period before they must commence repaying their loans. Once that six months is up, you have the option for filing for a specialized kind of repayment plan pending qualification. If you cannot afford standard repayment, you may qualify for extended repayment. With this option, you must have more than $30,000 in debt but not wield an outstanding balance. Extended payment gives you 25 years to pay off your debts with a stationary or graduated rate. Graduated repayment is another option and it gives you up to ten years to repay debts. Payments begin low and increase every two years.
There are also income-based plans that permit you to only make a monthly payment that is affordable with your income. Income contingent repayments permit you to pay either 20 percent of your monthly income or an amount calculated by “amount that would be paid of the loan over 12 years multiplied by an income percentage factor that varies with your yearly income” according to the Federal Student Aid department. You are not obligated to stick with these plans either. If you realize that the one you chose is not working for you, you may switch after a year and sometimes less.
If none of these options are right for you and you are still fighting with paying off your loans, you should know that student loans cannot typically be absolved through bankruptcy. If you come to this point, a wage garnishment may be sought against you by a creditor. A wage garnishment is a legal request that seeks to take money as payment from an employee’s salary. To avoid a wage garnishment you should seek professional help from a bankruptcy attorney. There is a defense against these kinds of creditor tactics, but you should speak with a legal professional in order to develop a strategy in your defense.