You CAN prevent default by being proactive and making smart choices. If you can't afford your student loan payments, don't wait until you fall behind to get help. Late or missed payments stay on your credit history for up to 7 years. Defaulting on your loans has serious consequences.
How to Prevent Default
- Borrow Smart. Don't borrow more than you need or more than you expect to be able to repay. Develop a sound—and realistic—financial plan.
- Stay Current. Make your loan payments on time, and notify your lender or servicer when you move or change your address.
- Change your Due Date. If your due date falls on the same week as another major bill (i.e. rent, car note, car insurance) consider changing your due date so you don’t missed or become late on your payment.
- Reduce your Monthly Payments. Changing your repayment plan may mean lowering your monthly payment. Speak to your lender to see which repayment plan works best for your current financial situation.
- Consider Consolidation. Consolidating your federal student loans may lower your payments, but it also may result in losing some of the benefits that your original loan(s) had. Learn more about a Direct Consolidation loan to see if it’s the right fit for you.
- Postpone your Payment. Everyone experiences financial difficulty. If changing your repayment plan doesn’t help, you may qualify for a loan deferment or forbearance. Each option has its own qualifications and benefits but should be your last resort.
- Don’t Forget the Interest. If you place your loans in forbearance, consider still paying on the interest. If you don’t pay on the interest, it will continue to accumulate while in forbearance which will make your overall loan balance higher in the future.
How to Resolve Default
Loan Rehabilitation and Loan Consolidation are available to help you resolve any default loan issues. Both programs have their own pros and cons so make sure you research the benefits of each.
Loan Discharge & Loan Forgiveness may be available to students in certain, limited circumstances.
Loan Refinancing can help you to lower your monthly payments to make your monthly budget more manageable. Here are some helpful resources.