Student loan payments care little for how the economy is doing and they don’t watch the stock market to access the financial health of the nation either. The average student leaves college with up to $80,000, more or less, in college loans. If unemployment is plaguing you like most of the country and that student loan payment has come due there are options to keep you from defaulting. Most student loan lenders will allow you to enter into deferment or forbearance, but there are some things to consider before going those roads.
A deferment or forbearance is a delay of payment for student loans. Most federal loans use the word deferment and private lenders use forbearance for their loans, but essentially they mean the same thing. Most student loan lenders will allow you to enter a period of deferment or forbearance if you are unemployed, suffering economic hardship, going to graduate school, or for health reasons. These days, most people need to enter deferment or forbearance on student loans due to unemployment, so if this is the case then contacting your student loan lender is the first step. (If you have multiple student loans read this article for consolidating for a lower interest rate)
A deferment or forbearance can be anywhere from a month-to-month basis to a yearly one in most cases. Most federal student loans will go year-by-year up to three years while private student loans vary by lender. Find out what the length of a deferment or forbearance would be with your student loan lender.
Also, the big problem with deferring or forbearing a student loan is interest still accumulates. This can add to the value of your student loan so paying off the interest during the deferment or forbearance period is never a bad idea. It can save you money in the long run. However, if you are completely without income then there is no penalty for not paying the interest on a student loan during a deferment or forbearance period.
A deferment or forbearance keeps your loan in good standing so don’t avoid it and let the loan go into default which will show on your credit. Simply call your student loan provider and explain your situation. Ask if there are lower payment options, any way you can get a lower interest rate, or go straight for the deferment or forbearance if paying anything on the student loans isn’t an option at the present time. If you have trouble then keep calling and you will find someone who can help or will sympathize and assist you in your need.
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