If you are one of the 44 million people in the United States who are having trouble paying off your student loans, you are not alone. New data shows that student loan debt is greater, per person, than ever before. For one, nearly half of all student loan holders leave school with at least $20,000 of debt; that is twice what borrowers owed about ab decade ago. Actually the average student graduating from college (or post-secondary) will get that degree with more than $37,000.
All together, this population owes more than $1.4 trillion in student loans.
In fact, the United States Consumer Financial Protection Bureau Director Richard Cordray reports: “The Bureau’s research shows that people are taking on more student debt later in life, and having a tougher time paying it back.”
But just because you are not alone on this journey, that doesn’t mean the agencies involved will be any more understanding. If you are looking to take out student loans, you need to make sure that you understand the terms; and hopefully you find one with flexible repayment options. If you don’t, you could find yourself in one of the many student loan pitfalls.
For one, if you are not able to pay back your loans on time, they first become delinquent. Delinquency is not necessarily a problem, as long as it is temporary. You can miss a payment once in a while and there is not usually a problem. If you think you are going to have trouble, you can also usually make arrangements with your lender to make a later payment or have all your payments deferred through a program called forbearance.
Forbearance is an excellent option if you know that you are probably going to need several months to start making payments. Essentially, you can apply for financial hardships and simply have the payments reduced or even stopped, as well as the interest (depending on the loan type).
The following types of loans will not accrue interest during a deferment or forbearance period:
- Direct Subsidized Loans
- Subsidized Federal Stafford Loans
- Federal Perkins Loans
- [the subsidized part of] Direct Consolidation Loans
- [the subsidized part of] FEEL Consolidation Loans
The following types of loans will continue to accrue interest during a deferment period:
- Direct Unsubsidized Loans
- Unsubsidized Federal Stafford Loans
- Direct PLUS Loans
- FEEL PLUS Loans
- [the unsubsidized part of] Direct Consolidation Loans
- [the unsubsidized part of] FEEL Consolidation Loans