Student Loan Deferment and Forbearance

You graduated last May and you still haven't found that job paying the big bucks, and now Uncle Sam wants his money for all those great student loans you got to get you through college.

The one thing you don't want is to fall into default. If you know you won't be able to keep up with the payments due to financial hardship, get in touch with your loan servicer and find out how to apply for either deferment or forbearance. Don't let it get to default, because then your options become very limited.

Upcoming Scholarship Deadlines

Kohl's Cares® Scholarship Program is open for nominations from February 1 through March 15, 2012. Children from 6-18 who are not yet in college may be eligible for this scholarship. Winners will be children who have volunteered and made their hometowns a better place to live. Scholarships range from $1,000 for regional winners to $10,000 for national winners.

Recently updated pages on College Scholarships:

Deferments and Forbearance
Student Loan Offset

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Student Loan Grace Periods End

The grace period on student loans to those who graduated last May has ended and it's time to start paying them back. That's ok if you have landed a job that actually pays you enough money to live on, but what about those who either haven't found a job or your pay isn't adequate to subsist on?

You do have a few choices, but one of them is NOT burying your head in the sand and ignoring the situation. That will only put you into default, hurt your credit rating (not a good idea for anyone, but especially someone just starting out) and possibly lead to legal action. Get in touch with your lender and explain your situation.

One possibility is student loan deferment. This is a temporary suspension of loan payments for various reasons including reenrollment in school, unemployment, or economic hardship. For your subsidized loans, you won't need to pay interest while the deferment is in place. For non-subsidized loans, you are responsible for the interest added during your deferment. If you are unable to pay it, your loan will be recapitalized and the interest added into the total you owe.

Even if you aren't eligible for deferment, you may be able to use forbearance which is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. Forbearance may be granted by your lender for 12 months at a time up to a maximum of three years.

Student loan forgiveness may be possible in exchange for service in various organizations such as Peace Corps, VISTA, Military Service and also by agreeing to teach in certain underprivileged or low income areas as defined by the Department of Education.

Bankruptcy is probably not a very good option. Not only will it hinder you going forward since it remains on your credit reports for years, but the student loans are not usually discharged in a bankruptcy and you will still end up owing the loans.

Bottom line...if you are having trouble paying your student loans, talk to your lender as soon as possible. Don't wait until you are already months in arrears.

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New Hampshire Higher Education Loan Corporation Suspends Alternative Loans

In a press release dated March 4, the New Hampshire Higher Education Loan Corporation (NHHELCO) announced that they would suspend their alternative student loan program as of March 11, 2008.

NHHELCO stated that they would be focusing on the Federal Student Loan Programs. Previously, in January, NHHELCO suspended the Federal Consolidation Loan program. Many agencies have had to cut back on programs due to difficulty in securitizing their student loan debt.

Last year there were 4769 New Hampshire students who took advantage of NHHELCO private student loans. All those students will have to find alternative funding this year, most likely at a higher cost.

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Student Consolidation Loan Checklist

If you are graduating college soon, now is the time to begin preparations for your student consolidation loan. You have a six month grace period after graduation before payments begin, but the consolidation loan application process can take several weeks, especially if you haven't gathered all your loan information and decided on a lender.

Inventory your student loans. Make a list of all your loans, including type of loan, lender, the amount of your loans, interest rates and the amount of your payments. Review your loan documents, contact your lenders or loan servicers or go to the National Student Loan Data System (NSLDS) website. If you don't know your PIN (Personal Identification Number) to log in, you will have to request a new one and it will be mailed to you. Expect to wait a week or two for the PIN to arrive, so best to get it done early.

Read the rest of this article at Student Consolidation Loan Checklist