Avoid Garnishment With Student Loan Repayment Options, Part One
A college graduation is a momentous occasion. It marks a major accomplishment, recognizing the completion of a degree as well as several years of hard work. Yet with a bad economy and a difficult job market, many new graduates are unable to enjoy their achievements. For recent college graduates, and for those who graduated in May and who are now entering loan repayment, student loans can be impossible to pay, resulting in wage garnishment, harm to a credit score, and confiscation of federal tax rebates. However, there are many options available to graduates to ensure that they are able to maintain their good standing and to, eventually, repay their student loans.
Currently, student loan debt in the United States tops $870 billion, which is $50 billion more than is owed on credit card debt across the country. Borrowers of student loans have an average debt load of $24,000, which equals out to monthly payments of approximately $275 for the standard 10 years of repayment. In anticipation of this significant monthly amount, many recent graduates are turning to drastic measures. According to a recent poll, approximately 85 percent of college students reported plans to move back home after graduation.
Yet many of these graduates are unaware of the many advantages that come with federal student loans. There are many different repayment options which can help borrowers make monthly payments with ease (or at least with a lot less stress). In addition, there is the option of deferment, which halts payments in the short-term based on unemployment or other economic hardship, military service, or reenrollment in college. Forbearance is a similar option, but the loan provider will determine eligibility.
We will continue this discussion in our next post with a look at the other options for student loan repayment.
Source: Reflector, “Let student loan games begin“, Bill Pratt, 26 December 2010