college loans / student debt / student loans

Behind on Federal Student-Loan Payments?

Lots of options exist, including suspending payments, but some will increase what you owe

Cheryl Winokur MunkThe Wall Street Journal, 3/9/20. 

“Getting behind on student loan payments—or worse, defaulting—can lead to serious financial consequences.” 
Call your loan servicer to learn options to lower or suspend payments. (call the Federal Student Aid Information Center at 800-433-3243 to obtain this information.) 

These options are applicable only for federal student loans. You have far fewer options with private loans. 
Option 1: Change repayment plans

The Federal Student Aid “office’s Loan Simulator, found at studentaid.gov, can help borrowers find the best repayment strategy based on their individual circumstances, including a plan that offers the lowest monthly payment, fastest payoff term or lowest amount paid overall.” 


Graduated repayment plan.  Open to all federal loan borrowers.
Payments are lower at first and then increase, usually every two years.

Extended repayment plan. Only certain loans qualify; payments can be extended for u to 25 years. You’ll pay more interest tha in the traditional 10 year repayment plan. 

Income-driven repayment.  
“There are four income-driven plans for which borrowers may qualify. Each of these plans limits borrowers’ payments to a percentage of their income.” Payments are limited to a percentage of income.

Income-sensitive repayment. “This is only for borrowers who have Federal Family Education Loans, a loan offering that was discontinued in 2010.”

Option 2: Deferment

Some borrowers can qualify to defer payments on the principal (and on the interest, if the loan is subsidized).  Must show economic hardship to qualify.
Option 3: Forbearance

“Borrowers who don’t qualify for a deferment can apply for a forbearance, in which they temporarily halt payments or make smaller payments.”
“During forbearance, borrowers are still responsible for paying interest that accrues.”

Other considerations

“In general, if you are facing a hardship that is likely to be short-term, you could be better off with a deferment or forbearance, say for a month or two.”
“However, struggling borrowers will be better off changing their repayment plan than seeking deferment or forbearance.”
Also check out:
Student Loan Sherpa: https://studentloansherpa.com/ a website for student-loan education, strategy and borrower advocacy. 
Edvisors helps students and parents make informed decisions about ways to pay for college costs and financial aid, including scholarships and student loans.  https://www.edvisors.com/
Source: Financial Planning for Women