A Student Loan, or more accurately the repayment of student loans is a major, national issue. Most college students are under the delusion that they will be able to quickly repay their student loans because of immediate higher earnings derived from a college education. However, this is not necessarily true. With the current global recession, there are fewer jobs and this would explain why there is a sudden spurt in loan forbearance, loan deferment and student loan default.

Taking into consideration the difficulties that many students are having in repaying their loans, many lenders are writing off unmanageable loans. In fact, last year, Sallie Mae wrote off 3.4 percent, and Citigroup 2.3 percent of their student loans. The good news for all university students and graduates is that, you can take advantage of a 6-month holiday on federal student loan repayments.

student loanIf you are unable to currently pay your student loans, here are some options that can help you relieve your financial burden.

A deferred repayment plan (loan forbearance) for up to 3 years. This may appear beneficial in the beginning but it can only aid a student overcome short-term financial problems. It may not help a student in the long-term, as the interest keeps climbing during the deferred period and the student is still obliged to pay.

A better option for students who have federal student loans may be a loan deferment. This is mainly because the government will pay the interest on the loans. But, this is no help for students who are burdened with unsubsidized loans or PLUS loans. Financial experts calculate that student should choose forbearance or deferment only as a means of easing their financial situation temporarily. They should not be viewed as a long-term solutions.

Student Loans may become necessary after savings, grants, and scholarships have been exhausted. If federal educational loans don’t cover your costs; then it’s time to turn to private student loans. You can apply for a private loan at any time – there is no deadline. Depending on the lender you choose, you can be pre-approved in minutes and have the money sent directly to you within a matter of days.

In addition to paying tuition and fees, funds from private loans can be used to cover supplies, computers and other everyday living expenses. For most loans, your interest payments and principal can be deferred as long as you are enrolled in school. Another option is to just make interest payments while you are in school and defer paying on the principal. Your interest payments might even be tax-deductible.

Students who have several educational loans often find it advantageous to combine their various loans into one student loan consolidation. You have some choices in repayment plans that can make repaying easier and help you avoid delinquency or default. If you’re delinquent, it means you’re at least 30 days late making a scheduled loan payment.

Default generally means you’re 270 days or more late in making a loan payment. Federal Perkins Loans, however, consider default as the failure to make an installment payment when due or the failure to comply with other terms of your promissory note or written repayment agreement.

If you are planning on a long-term answer, then contact your lender and extend the term of the loan. This may be the best option for students who are just beginning their careers. By stretching out the term of the loan, you will be committed to smaller monthly payments. Remember, however, that this will augment the interest on a student loan, for a longer term.

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