Do you have any options if you can’t afford to repay your student loans?

On Behalf of | Jun 9, 2021 | Bankruptcy

Student loan interest rates have been at 0%, and there’s been a pause on monthly payments since March 27, 2020. That reprieve comes to an end on Oct. 1, 2021. Many lawmakers fear borrowers won’t be able to foot the bill for what they owe once that happens.

If the thought of repayment of your student loans concerns you, then you should apprise yourself of what happens if you stop paying and what you can do if you’re struggling to make payments.

How soon after graduation must you repay your federal student loans?

The federal government generally gives you a 6-month grace period after you graduate before you have to start making student loan payments of Direct Unsubsidized and Subsidized or Federal Family Education loans. A 9-month grace period applies to Perkins Loans. You generally have 15 days to make a payment after the due date. There are consequences if you don’t.

What happens if you don’t make timely student loan payments?

Any failure to make timely student loan payments may constitute a delinquency. It can affect your credit score. It may also impact your ability to land a job if your prospective employer performs a credit check. It’s ideal if you can get your payments back on track to avoid causing long-term damage to your credit.

Your failure to pay your federal student loans for more than 270 days constitutes a default. Federal officials may begin garnishing your disability benefits, federal tax refund, Social Security payments and wages once this happens. Some states also allow for the suspension of drivers and professional licenses. If you have a private lender, then they must request a court order to initiate garnishment first.

The federal government will transfer your account to a collection agency if a year lapses without any payments.

What can do you if you’re unable to make student loan payments

One of the best things you can do if you’re having difficulty staying on top of your payments is request an economic hardship deferment from your lender. You may also ask your lender if they can offer you an alternate repayment plan. While student loans generally aren’t dischargeable via bankruptcy, there are some extenuating circumstances in which they might be. You may find it helpful to read more about the subject to find out more about options you have for getting debt relief in your situation.