How to Prevent Student Loan Default

After you have not paid your student loan for 270 days when your loan is due in monthly installments, or 330 days when the loan is repayable in less frequent installments, you could be in danger of defaulting on your loans. Defaulting is when you do not pay the minimum amount due on loan bills monthly or in a frequency that was determined by repayment arrangements.



The loan agency that you have borrowed from may have the right to take legal action against you if you do not pay the amount owed. It could refer your account to a collection agency and report your nonpayment to the credit bureaus, which could possibly bar you from getting loans or buying a house or car in the future.



There are ways you can prevent loan default, even if you do not have the ability to pay the bill at the time it is due.

Instructions

    • 1

      Call your loan agency and ask it to lower your monthly payment if you're struggling to make your loan payments each month. Options include paying only interest on the loan for a certain period of time or extending the loan repayment time.

    • 2

      Use one company or bank to consolidate all your loans into one monthly payment if you have multiple loans from different loan agencies. Usually these consolidation companies will also make that monthly payment lower than what you would pay if you were paying each loan individually. Consolidation companies include Loan Approval Direct and Next Student.

    • 3

      Put your loan into deferment or forbearance If you have no way to meet the minimum payment of your loan each month. This allows you to skip your monthly payment without risking a hit to your credit score. The interest will continue to grow on the loans while they are in deferment or forbearance, making the minimum payment more when the loan becomes due again. Deferments and forbearances can range anywhere from a month to three years depending on how long you have been out of school, if you have received a deferment or forbearance before and if you have already defaulted on the loans. Contact your loan agency for more details.

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