Student Loan Debt

Student loan debt for many is the less desirable burden many students accumulated in college in addition to their diplomas. With the soaring cost of tuition, federal student loan debts average around $17,000. Many school loans, especially medical school loans, are over $100,000. In a slower job market with smaller starting salaries, conquering one's college notes can seem a daunting task since repayment of these debts commences shortly after graduation. There are several options to handling these notes.

It is very important to avoid having student loan debts become defaulted. Default loans are reported to credit card agencies and the government can pursue collection by garnishing wages and tax refunds. A bad credit score can hinder a young person for years, negatively affecting their ability to secure a car or home mortgage. Also, landlords, insurance companies and even potential employers are looking at credit histories to make decisions. Unlike other loans, student loans can not be erased by declaring bankruptcy.

If a person finds himself unemployed and unable to repay a student loan debt, it is important contact one's lender immediately. Once a note has become default, the options are much more limited. The debtor may be able to work out a deferment payment plan based on financial or other hardships, or the lender can discuss options with the debtor such as student loan debts consolidation.

Consolidation is a worthy option for many since it enables the debtor to roll the multiple notes into one note, often at a lower interest rate. Also, the repayment period can be extended to as long as 30 years as opposed to the standard 10-year repayment period a Stafford note carries. While this will increase the interest the debtor pay on the note amount, the monthly amount the debtor will have to pay out is much more manageable on a beginning level salary.

To help those conquer their obligations, the federal government has created several programs to make the repayment of loans a more flexible process. Programs offer income-sensitive monthly payments, where the debtor's monthly payments will rise as the salary does. The federal government has also established some attractive tax breaks to help make repaying the indebtedness easier. The interest on these notes interest is now tax deductible. There is also a note rehabilitation option for default loans that enables some of the penalties and negative information relating to default note to be removed from the debtor's credit once he has made 12 consecutive months of repayment.

Repaying one's student loan debt should be a high priority once a student graduates from college. If necessary, a student might consider delaying attending grad school until the student note obligations have been lessened or cleared. There are many flexible options for repaying the obligation, but it is critical to identify the right option for an individual before the loan obligation becomes default and creates additional problems for the future.

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