Don’t Default on Student Loans: What to Do If You Can’t Pay

Paying back student loans can be nearly impossible with the high monthly payments. Unfortunately many stop paying and end up defaulting on student loans.

Don’t default on student loans. It’s the worst thing you can do if you can’t pay, and it’s avoidable. There are other options available if you aren’t able to pay on your student loans.

Don’t default on student loans: What to do if you can’t pay – deferment

There are many reasons why a person may be temporarily unable to make monthly payments on their student loans. Fortunately there are many options available to help you out during a hard time.

One such option is called deferment. To qualify for a deferment depends on the type of loan you have, your loan company, the reason for requesting deferment, as well as other determining factors.

One form of deferment is called an “Economic Hardship” deferment. This type of deferment applies in a situation where your loan payments are a large portion of your total monthly income or is more than your total monthly income. Economic deferments are also granted to individuals who are unemployed.

While loans are in deferment, depending on the type of loans you have you may not have to pay interest. Many student loan companies can give grant a deferment for up to 12 months. If you request a deferment before you’re student loan payments are due, or before missing a payment, it will not reflect negatively on your credit.

However, defaulting on your student loans will leave a huge scar on your credit and will quite likely prevent you from qualifying for future loans.

If you cannot pay your student loans, call your loan company before payments are due to request a deferment. If you do not qualify for deferment there are still other options.

Don’t default on student loans: what to do if you can’t pay – forbearance

Forbearance is similar to deferment, but different in that you may be qualified to make monthly payments on interest accrued while the loan(s) are in forbearance.

The steps to find out if you qualify for forbearance are the same for deferment. Contact your student loan company before payment is due, explain to them your reason for not being able to pay, and ask to apply for forbearance.

You can often apply for forbearance or deferment online, but if not your student loan company can mail or
fax the proper forms and instructions to you.

Don’t default on student loans: what to do if you can’t pay – Consolidate your student loans

If for some reason you do not qualify for deferment or forbearance you may be able to consolidate your student loans if you have more than one loan and more than one payment to make.

Consolidating your loans means having all of the separate loans combined into one loan, with one monthly payment that is lower than the payments you were making on the separate loans.

You can choose to have the loan repayment period extended, which will lower your monthly payments, but will mean you pay more in interest in the long run.

If you do not qualify for forbearance or deferment, find out more about consolidating your loans, and lowering monthly payments.

Don’t default on student loans: what to do if you can’t pay – communicate with your student loan holder

Make sure you communicate with your student loan holder if you have a problem making payments. If you talk to them and discuss your difficulty paying they can usually help you set up a repayment plan that will work for you.

Even if you have already missed a payment or two get in contact with your loan holder immediately. Explain why you haven’t paid and that you want to make arrangements to keep your loan in good standing. Many Loan holders offer forgiveness on late or missed payments if you don’t wait too long to contact them and address the issue.


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