| Did you know that taking out a Federal Student Loan | | | | receiving an education award, or if you are serving in |
| is just as real as taking out an auto loan or a home | | | | a medical or dental internship or residency program |
| loan? Because it's backed by the Federal | | | | and meet certain other requirements, your lender is |
| Government, they won't let you declare bankruptcy | | | | required to grant you forbearance. |
| to get rid of it, nor will they let you off the hook | | | | Federal Student Consolidation Loans |
| because you lost your job, or you didn't get the | | | | You can consolidate several Federal Student Loans |
| education you expected either. In fact, getting rid of | | | | into one loan to help make the loan payments more |
| a student loan, short of paying it off, is pretty | | | | manageable with a federal consolidation loan. There |
| difficult. | | | | are several types of federal consolidation loans to |
| Although your credit history was not taken into | | | | choose from which offer loan repayments from ten |
| account when you received federal student loans, | | | | to thirty years, depending upon the amount of your |
| your credit history will be affected if you do not | | | | debt. The interest rate is a fixed rate for the life of |
| repay your federal student loans under the | | | | the loan for both Direct and FFEL Consolidation Loans. |
| repayment plan you agreed to when you entered | | | | The fixed rate is based on the weighted average of |
| repayment. | | | | the interest rates on all of the loans you consolidate, |
| Assuming you have some Federal Student Loans that | | | | rounded up to the nearest one-eighth of 1 percent. |
| you are having a hard time repaying, let's look at | | | | However, the interest rate will never exceed 8.25 |
| what your options are for getting rid of student | | | | percent. |
| loans. | | | | What Is The Downside To Consolidating Student |
| What Do I Do If I Can't Make My Student Loan | | | | Loans? |
| Payments? | | | | There are some instances where consolidating |
| Your student loan debt is a legal obligation and can be | | | | student loans may not be the best choice for you, |
| a 10- to 30-year financial commitment. This type of | | | | even though it may help you lower your overall |
| debt won't go away by ignoring it. You need to | | | | monthly payments. Certain benefits may be lost |
| contact your lender or servicer immediately to get | | | | (such as cancellation benefits, interest subsidies, etc.) |
| help and discuss what your options are. There are | | | | that were offered on the loans being consolidated. |
| many ways to get help, including changing your | | | | Extending your payments or consolidating your loans |
| payment due date, repayment options, deferment or | | | | may not be in your best interest if you are close to |
| forbearance. | | | | having those loans paid off. If you lengthen the term |
| What Happens If I Miss A Student Loan Payment? | | | | of your loan, interest will continue to accrue during |
| If you start to miss payments or you don't make | | | | this time, which increases the total amount of |
| them on time, as of your first missed or late | | | | repayment. |
| payment, your student loan will be considered | | | | Student Loan Forgiveness |
| delinquent and you can be assessed late fees. After | | | | Some schools may forgive a portion of your student |
| 270 days of making no payments, your loan will go | | | | loans if you perform certain types of service such as |
| into default and your credit score will plummet. This | | | | teaching in a low-income school. This program must |
| can affect you well into the future since derogatory | | | | be set up in advance, and not be relied upon say if |
| credit remains on your credit report for 7 years. You | | | | you get a job as a teacher then default on your loan. |
| may no longer qualify for any future student loans | | | | If you're an employee of state or local government, |
| that you may need and you may not be able to rent | | | | you may qualify for loan repayment in return for |
| an apartment, buy a car or own a home. | | | | working in a job that is in great demand. Make sure |
| What Is A Student Loan Deferment? | | | | you check into these options by asking about them |
| If you meet certain requirements, you may be able | | | | at your school or job. |
| to qualify for a student loan deferment. This is a | | | | Student Loan Discharge |
| period in which repayment of the principal balance is | | | | A student loan discharge means your student loan will |
| temporarily postponed to a later date. If the loan is | | | | be canceled and will no longer require repayment by |
| subsidized, the government pays the interest | | | | you. You will qualify for your student loan to be |
| charged during the deferment. You are responsible | | | | discharged for these reasons, even if you're currently |
| for the interest that accrues during the deferment | | | | in default:o If the school you attend closes before |
| period for all unsubsidized loans, including PLUS loans. | | | | you can complete your program, you are not |
| At the end of the deferment period when you | | | | responsible for your student loans, and do not need |
| resume making payments, your principal balance will | | | | to repay them. The loans are canceled in full, and |
| increase by any unpaid interest that has accrued. | | | | your credit report is not harmed by this.o False |
| Now, if you do not meet the requirements for a | | | | Certification - If you can prove that the school misled |
| deferment, you may still be eligible for forbearance. | | | | you into thinking that you would benefit from their |
| How Does A Student Loan Forbearance Work? | | | | program and the loans or debt you took out was a |
| Under certain circumstances such as a financial | | | | result of such promises; under certain guidelines, you |
| hardship or illness, where you are unable to make | | | | loans can be discharged.o Your deatho Total and |
| your scheduled loan payments for a limited time or | | | | permanent disability |
| specific time frame, you may be able to get a | | | | Student Loan Bankruptcy |
| student loan forbearance. This will allow you to | | | | In most cases, a loan, whether in default or not, |
| postpone or reduce your monthly payment amount. | | | | cannot be discharged in bankruptcy. However, you |
| You'll go about requesting a forbearance directly from | | | | can request a special "hardship hearing" where you |
| your current lender or servicer. | | | | present your case to a special judge, explaining why |
| For all loan types, you will be responsible for all the | | | | repaying the loans would be an undue hardship. Only |
| interest that accrues during the forbearance period. | | | | a very small percentage of people successfully |
| That unpaid interest will be tacked onto your principal | | | | discharge their loans, so it would be wise to consult a |
| balance as soon as you resume making payments | | | | bankruptcy attorney for more information on this |
| once the forbearance period is over. If you are | | | | option. |
| serving in an AmeriCorps position for which you are | | | | |