Defaulted Student Loan Consolidation

For students who have loans they are unable to pay back, there are a variety of ways to help avoid a bad situation from getting worse. For example, there are deferment plans that can be used on student loans. These plans allow you to stop making payments for a period of time if you are under financial hardship. However there are limits as to how long a deferment can last and eventually you will need to repay your loan. For those who are in default status, defaulted student loan consolidation should be considered.

When you default on a loan, it means the government can turn your account over to a collection agency and even take your tax refund to repay the loan. You can even be sued, which is something you do not want. However, consolidation can help you get out of trouble. The most important thing to know about student loan consolidation is that the federal government will only do it once. You will need to get in touch with a loan officer from the federal government. Contact information should be listed on each invoice you receive.

There are income based repayment plans for consolidated loans that you can select from. There are other options as well that a loan officer can discuss with you. Once you have decided on a consolidation plan, you will be mailed documentation that lists all the loans that will be consolidated, the new total amount of your loan and your monthly payments. You should find that consolidation lowers your monthly payment because it combines all your loans into one single loan and can be stretched out over a longer period of time.

In addition to looking into defaulted student loan consolidation, you might also want to look into loan rehabilitation. When you request rehabilitation, you will be required to make consecutive monthly payments on time. The amount you will need to pay is negotiable and you should be honest with your representative about how much you can afford. Once you meet the rehabilitation requirements you can get out of default status.

The federal government is very willing to help individuals who are having trouble repaying their student loans. So if you are in default, investigate defaulted student loan consolidation and loan rehabilitation to see which option is right for you. However, to avoid this hassle, talk to a loan officer about a deferral or go ahead and consolidate for lower payments when you first realize you are having financial trouble. While you can get out of default status, it’s best not to get there in the first place.