Photo by Billy Alexander
If you're a college graduate struggling to make ends meet in this shaky economy, you might have two financial concerns: Rent and student loan payments. While there may be little you can do to negotiate rent with your landlord, student loans are a different story. According to the US Department of Education's Federal Student Aid website, there are more option now for resolving debt issues and making reasonable repayment plans than ever before. Even private lenders who are notoriously inflexible compared to the federal government are offering programs to help get defaulted loan holders back in good standing. Whether you have federal loans or private loans, the time to act is now because delaying payments can increase your interest rates, damage your credit report and even land you in court.

Things You Will Need

Statements or collection letters received via mail

Step 1

Determine what shape your loans are in. If you've been avoiding them for some time, they might have delinquent or default status. If you've just recently graduated or if you're currently on a forbearance or deferment, check with your lender to see the dates that these repayment terms expire. Always know your repayment status and stay on top of your loans.

Step 2

Contact the The U.S. Department of Education's Default Resolution Group at 1-800-621-3115 for defaulted federal loans. These specialists will be able to outline all of your options and process payments over the phone.

Step 3

Find out what lender or lenders own your private student loans. This might take some phone tag as private lenders are notorious for selling off loans. You might find that you have more than one loan company. Ask the customer service representative about two common types of help: economic hardship forbearance and graduated repayment plans. Economic hardship forbearance mean you can take a short break from paying your loans while you look for work or get back on your feet. Graduated repayment plans mean you can pay only a portion of your payment, based on our income, for a predetermined period of time.

Step 4

Opt to put your federal loans on the new income based repayment plan. This plan adjusts the amount of your payments based on your income, then forgives the remaining portion of your debt after 15 years. Contact your loan servicer to get set up with this program.

Step 5

Consider consolidating your loans. This works best with federal loans as very few companies consolidate private loans or federal and private loans together. Consolidation takes multiple loans and lumps them together into one loan with one often reduced payment. Consolidation also often locks you in at a steady, low interest rate.
It may be tempting to throw your hands up in the air and do nothing when confronted with student loan debt you can't pay, but once you get your situation sorted out, you'll regret not having taken action sooner. Student loan debt help is out there. Call your lenders, work out a plan to make no or reduced payment for the short term and breathe a sigh of relief instead of worry next time your phone rings and it isn't a persistent debt collector.

Tips & Warnings