What to Do If You’re Already Behind on Student Loan Payments

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For most college graduates, the months following their permanent departure from campus are an invigorating time. They have about six months of freedom, while also trying to find a job and settle into their adult life. Just when things seem to be going swimmingly, reality sets in with the arrival of their first student loans payment due notice.

Depending on the student’s preparation, this news can be taken in stride or in surprise. Advanced research can direct a lot of decisions, but what if you weren’t all that prepared? You might try to keep up with the payments, but your job isn’t paying as much as you had hoped. So you skip a payment or two, or start paying a little later than the due date. That’s when the interest and late fees start piling on, and you are really in a jam trying to make the higher payments. Now the collection agencies start calling, and you’re in danger of having bad credit less than a year out of college. Here are a few steps you can take if you’re already behind on student loan payments:

• Learn Your Loans: When you were borrowing money, it might not have made a difference to you whether you were using federal or private student loans. It can make a difference, though, now that you’re having payment problems. You need to figure out how much of your debt is in the form of federal loans, because there are repayment and consolidation options. Private loans might also have some flexibility, but you have to go directly to each lender.

• Reach Out and Touch Someone: Ignoring the late notices or refusing to answer the phone calls doesn’t make the problem go away. With federal loans, in particular, they can start garnishing your pay and seizing your income tax refund for payment. It’s best to gather your information, write out an explanation, take a deep breath, and calmly call your loan servicer to discuss. This puts you in control of the situation, and keeps you from getting too emotional on the call.

• Know Your Options: There are several options for federal student loans which might make payment easier. You may be eligible for a deferment or forbearance, which can give you a little more time to work on your financial situation. You could ask about income-based repayment plans, which bring your payments more in line with your actual income. Or you could consider loan consolidation, which gathers your federal student loans together, so you only have one payment each month.

Now that you’re “adulting,” take the steps necessary to learn how to become master of your financial world.

Get more information on student loans in my book, Secrets of a Financial Aid Pro! You will also find information on saving for college, completing the FAFSA, comparing financial aid offers, and searching for scholarships. Order it now, and get the information you need to pay for college.