Student Loan: Consolidation Solutions
Every problem has some sort of solution, even when it comes to student loan debt. When you are at the bottom of a heap of student loan bills it may seem like there is no way out. Even though the loan holding companies can be difficult to deal with, there are ways to get out of debt without filing for bankruptcy. For the various student loan problems, there are student loan solutions.
Student Consolidation Loan
When you want to repay your loan and improve your credit rating without having won the lottery, you may want to take a look at a student consolidation loan. Essentially, this loan pays off all of your outstanding loans (federal or private) and issues you a single loan with a low interest rate. These loans are usually long term (10 to 30 years) and have low monthly installments. There are a few plans to choose from for repayment so you can choose the one that fits your lifestyle best. You have to be in good standing to qualify for a student consolidation loan which means you cannot be in default status (sometimes delinquent status loans are acceptable but it depends on the lender).
Defaulted but Need Funds
If you have already defaulted on the loans and want to repay them you can do so. Often borrowers who found it necessary to leave the program prior to completion have difficulty finding a job that creates income enough to cover repayment. Eventually they decide to return to school but find that they are ineligible for other forms of financial aid due to the default. With no funding and a default it is virtually impossible to get another loan or go back to school. Many federal loans have clauses written into them that allow a defaulted student to make ‘reasonable and affordable’ payments for about six months to remove the default status from their loans and render them eligible for other aid. The payment amount is income based and can be as low as $5 per month. This may not be as effective, credit-wise, as a student consolidation loan but it will get you education funding.
Cancellation of Student Loans
Believe it or not, there are ways to have your loans partially or completely cancelled. They tend not to be the most positive ways to end a loan, but they do exist.
Disability – if you become permanently and totally disabled and a doctor certifies your disability, you can have your loan completely discharged.
Closed School – if your school closed within 90 days of your disbursement (even if you withdrew but did not transfer to another school) you can have your loan cancelled.
Military – if you are located in a hostile military location for a year or more you can have your loan partially or completely cancelled.
Bankruptcy – if you file for bankruptcy and can prove that repaying the loan is a financial hardship, the loan can be discharged.
False Disclosure – if someone signed for a loan with your name or you were the victim of identity theft, you can have the loan cancelled.
Death – if the student for whom the loan is written dies, the loan can be discharged upon verification by the lender of the death certificate.
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