About the worst thing that  can happen when you are trying to repay your outstanding student loans is default. Defaulting on your student loans can cause a lot of headache in the form of incessant collection calls, high late fees and poor credit ratings.

Maybe you have chosen to ignore your student loan payments in hopes that they will simply disappear, or you have some financial difficulty that makes it hard to repay the loans, whatever the reason you loans are headed for default and you need to stop the downward spiral. Choosing a consolidator with a great student loan consolidation rate can be the end to your worries.

Understanding Default

Defaulting on your loan means that you have not made a single payment within a specific period of time. In some cases you have to have made no payments within a full year to default on your loan. You will usually get some form of notice when your payments are late by postal or electronic mail.

After a while your loan will go into delinquent status and arrangements can be made to bring your loan back to being current. Once the default status is reached, it can be quite hard to regain good standing on the loan. It can take as much as a year's worth of on time, consecutive payments to change your status and credit rating.

Delaying Payments

There are ways to avoid delinquency and defaulting on your loans. If you have federal loans you have the options of deferment and forbearance. With private loans, the best option is usually getting a good student loan consolidation rate and signing up to that program. Consolidating can be a great option for federal loans because they retain their deferment and forbearance options while giving you the benefit of a low student loan consolidation rate for repayment.

Deferment

Deferment is basically postponing your loan repayment without having interest charged (accrued) during that period for subsidized loans. People usually choose to defer their loans when they begin subsequent education programs.

Forbearance

Forbearance can be requested to delay your loan repayments due to income related issues. If you are unable to work due to being laid off or in ill health and do not qualify for deferment you can request forbearance. Some forbearance programs require you to make small payments or none at all for a particular time frame. Forbearance can be requested on the principle, balance or both.

 

 

 

 

Sara Sentor
http://www.studentloaninfo.org