How to Renegotiate Defaulted Student Loans

Over the last few years, the cost of college tuition has risen tremendously and as a result many students have found it difficult to pay for college. For students who have difficulty raising the required finances, there is the option of applying for student loans from several of the lending institutions.

Loan application
With these loans, students can be able to enjoy their studies and pay for several items other than tuition such as accommodation, books among others. The repayment period of the loans is flexible and at the same time have affordable rates of interest. Students who have being given the loans are expected to repay them upon graduation.

Loan repayment
Repaying your student loans is important as this will help you avoid penalties and help other needy students get financial assistance. If you are having trouble repaying your student loans, know that there are things you can do to help you manage your student loans and make it easy for you to repay them. You will default on your student loans if you are not making payments on them or you fail to renegotiate the loans. If you default on the student loans, chances of you renegotiating better terms will be hard. There are several ways of managing your loans and making them affordable. You need to consider the best option for you while you are still making payments to your student loans.

Forbearance
This is the case where you are unable to repay your student loan and thus you make a request to the lender for a postponement of your payments. The payments became postponed temporarily or you pay a reduced monthly installment. However, this does not mean that the interest on the loan is also postponed. On the contrary, the interest will continue to pile up during this period.

Deferring the loan
If you have not defaulted on your student loans then you might have the loans deferred and thus became suspended for a specific period. You can qualify for a loan deferment if you meet these criteria. First, if you are totally disabled either temporarily or permanently. Also if you are unemployed, enrolled in school or joined the military on a full time basis. Other criteria include having a federal loan, which you are unable to pay and if you are providing health care to people in need.

Loan consolidation
This refers to combining all your loans into a single loan. By consolidating your loan, you will only deal with a single rate of interest, though you may have to pay the loan over a long period. Moreover, you will have to pay more in interest over the duration of the loan. If you decide to consolidate your loan, enquire if you can speed up the payments without being penalized.

Loan refinancing/renegotiating
If you are finding it hard to make your payments, you have the option of renegotiating the loans with much affordable rates of interest and flexible duration. The new terms you use will depend on the status of your finances. Keep in mind that you will be paying more interest each time you decide to renegotiate your loan. You have the following three refinancing options available. First, you can choose the graduated repayment in which you will make lower payments and increase them with time. The second one is the income sensitive repayment which ties your repayment to your level of income. The more your income increases, the more the repayment amount. Finally, there is the extended repayment that has a fixed repayment amount, usually monthly and has a longer duration than your current student loan.