How to Avoid Student Loan Delinquency

There are many reasons a person defaults on their student loan. Sometimes they may feel that the institution did not prepare them for the job field and doesn’t deserve to be repaid. Others may not be able to afford the payments and worry other bills will suffer. Whatever the reason, defaulting on student loans takes the borrower through terrible stress that is totally avoidable in most cases.

For the first time on record, delinquency rates on student loans surpassed the rate of default for credit cards, car loans and all other types of consumer loans.

There are six ways to work with the federal government to work out a payment plan:

  • Graduated repayment plan
  • Extended repayment plan
  • Income-based repayment plan
  • Income-contingent repayment plan
  • Income-sensitive repayment plan
  • Pay-as-You-Earn Repayment

According to Mark Kanrtowittz of FinAid.org’s interview in Bloomberg Business Weekly, “There is actually no rational reason for a borrower to be delinquent or to default on their loans.”

For calculators to check out your loan repayment options, visit the Department of Education’s Direct Loan site: http://www2.ed.gov/offices/OSFAP/DirectLoan/calc.html You can also find valuable information at www.studentloanborrowerassistance.org For help building a budget and a review of your options, contact a counselor at cccsok.org

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