The cost of tuition is rising and more students turn to student loans to fund their college education. In general, student loans are often considered good debt (if there is such a thing), so borrowing student loans isn't bad. However, when you borrow more student loans that you can afford, you risk student loan default. If you want to protect your credit, you must take the necessary steps to avoid student loan default.
Borrow only what you need
Many college students get trapped into taking on additional student loans in anticipation of a refund check. When you're deciding how much to take out in student loans, remember that you're borrowing from your future income. Borrow only the student loans you need to pay for education expenses, not extra to fund a lavish lifestyle.
Know when your payments are due
With most student loans, you have a six month grace period before your first payment is due. The clock starts ticking on your grace period the date you graduate or drop below half-time. Make sure your lenders have your most recent address or forward your mail to your new address. Not receiving your bills won't be an excuse for missed payments.
Get a repayment plan you can afford
If you think you can't afford your monthly payment, call your lender to discuss other options. Most lenders have several flexible repayment plans to choose from. For example, an income-contingent repayment plan fluctuates based on your income so when you make less, your payments are lower. Call your lender early to change your payment plan.
Look at student loan forgiveness programs
In certain situations, you may be able to have all or part of your student loans forgiven. This especially true if you work in the medical or legal field, are a member of the military, or volunteer for certain agencies. Check with your employer or your lender to find more information about student loan forgiveness programs you may qualify for.
Discuss forbearance and deferment in tough times
When financial changes make it difficult to make your student loan payments, get in touch with your lender as soon as possible. You may be able qualify for temporary forbearance or deferment. Both options allow you to lower or postpone your payments for a certain period of time. Be careful about delaying payments - any unpaid interest will be added back into your loan, increasing the amount you owe.
Bankruptcy is not an option
Unfortunately, the bankruptcy laws make it difficult and nearly impossible to have student loans discharged. If your student loans become difficult to pay, try making some changes to your budget and other expenses. When that fails, contact your lender to discuss other payment arrangements.
