If you’re falling behind on your student loans, you need to get help fast. Miss enough payments and you could face serious consequences, including damage to your credit score, having your wages garnished, getting✨ sued, or having your tax refund seized. Fortunately, both federal and private loan servicers have options for helping borrowers get𝓡 back on track, such as deferment, forbearance, refinancing, and more. Nonprofit organizations can also assist. And if those options don’t work, then hiring a knowledgeable attorney could be money well spent.

Income-Driven Repayment (IDR)

If you can’t afford your current monthly student loan payments, but a lower payment might be d๊oable, then you have a few optio൲ns.

Borrowers with federal student loans should consider applying for an 澳洲幸运5开奖号码历史查询:income-driven repayment (IDR) plan. This can be a good choice if your current income is low relative to your student loan debt. Your monthly payments under an IDR plan could be as low as $0. Each year, you will need to recertify your income with the federal government, and your monthly payment will be adjusted based on your income an🥂d family size.

There are four different IDR plans; which ones will be available to you will depend on the type of federal student loans you have.

When you choose an IDR plan, you’ll probably pay more interest in the long run, as you’ll owe money for a longer period and be paying down the 澳洲幸运5开奖号码历史查询:principal more slowly than if you were on a standard 1ꦉ0-year repayment plan.

IDR plans forgive your remaining balance after 20 or 25 years of payments, but you may owe federal 澳洲幸运5开奖号码历史查询:income tax on the forgiven sum. It’s a good idea to set aside a little money each yea🅷r𝐆 so you’ll be able to pay that bill one day.

IDR won’t solve everyone’s student loan problems. Some borrowers find that they have so many mandatory expenses, such as taxes and child care, tha𝔍t they still can’t afford their loan payments.

And if your loans are in default, then you aren’t eligible for IDR (or for deferment or forbearance, for that matter). You’ll first need to fix the default through loan rehabilitation or consolidation, as explained below.

Deferment and Forbearance

Deferment and 澳洲幸运5开奖号码历史查询:forbearance are two ways to temporarꦆily stop making payments or lower your payments on federal student loa♚ns. Some private lenders offer one or both, with different rules.

Borrowers with subsidized federal loans or federal Perkins loans don’t have to pay the interest that accrues during deferment. Forbearance, on the other hand, doesn't stop interest from accruing on any type of federal student loan. Private lenders decide how to handle interest accrual under defeℱrment or forbearance.

澳洲幸运5开奖号码历史查询:Your lender or loan servicer will require you to meet certain conditions before it approves your request for deferment or forbearance. For example, federal student loan borrowers may be able to take a break from making payments if they are unemployed, experiencing economic hardship, undergoing or recovering from cancer treatment, or serving on active military duty.

Delinquency and Default

Either deferment or forbearance may be better than letting your loans become 澳洲幸运5开奖号码历史查询:delinquent. Once your federal loan payment is 90 days late, your 澳洲幸运5开奖号码历史查询:loan servicer will report your delinquent payments to the three major credit bureaus, which can hurt your 澳洲幸运5开奖号码历史查询:credit score. For private lenders, it can be as little as 30 days. This will make it harder to get other forms of credit or do anything else that requires a 澳洲幸运5开奖号码历史查询:credit check, such as renting an apartment or getting a job.

Going into default is even worse. The timing varies by loan type, but for federal direct loans and Federal Family Education Loans (FFELs), the debt is in default if it's 270 days late. For private student loans, default can occur after 120 days of missed payments.

The consequences of default will be defined in your loan agreement. Your entire balance can become due immediately, your lender can sue you, and your wages can be 澳洲幸运5开奖号码历史查询:garnished, among other consequences.

If Stud𝄹ent Loans Are Part of a Bigger Financial Probl𓆉em

A nonprofit 澳洲幸运5开奖号码历史查询:credit counseling organization can work with you tꦓo come up with a personalize💧d plan to repay your student loans and any other debts. You may have to pay a fee for this help.

A reputable place to search for help is the 澳洲幸༺运5开奖号码历史查询:National Foundation for Credit Counseling𓆉 (NFCC). An NFCC credit counselor can offer guidance on your entire financial picture, not just on getting your student loans under control.

When Your Federal Student Loans Are in Default

If your federal student loans are in default, you can either enter the federal student loan rehabilitation program or try loan consolidation.

Loan Rehabilitation

The federal student loan rehabilitation program requires you to make nine payments within 10 consecutive months. You’ll need to work with your 澳洲幸运5开奖号码历史查询:loan servicer to determine your required payment, which will be based on your disposable income.

You’ll also need to provide proof of your income and possibly your expenses. The Federal Student Aid website says your payments could be as low as $5 per month under a rehabilitation plan.

Once your loan is rehabilitated, you can apply for deferment, forbearance, or IDR. Your 澳洲幸运5开奖号码历史查询:credit report will no longer show a default, ไthough it will still show the late pa🅰yments that led to your default.

You only get one chance to rehabilitate a loan. In addition, your loan will continue to accrue interest during rehabilitation, and you may have to pay collection fees as well.

Loan Consolidation

Loan consolidation is another option for getting out of default. You may be able to use a federal 澳洲幸运5开奖号码历史查询:direct consolidation loan to pay off your defau🔜lted loan. You can then set up an IDR plan for your new con🅠solidation loan if you need to.

You’ll need to make three consecutive monthly payments on your defaulted loan before you can consolidate it. Your loan servicer will base the amount of the payments on your current f♉inancial circumstances, s൩o they may be less than you were required to pay in the past.

Consolidation will get you out of default sooner, but it won’t remove the default from your credit report. It also comes with possible collection fees and additional accrued interest.

When Your Private Student Loans Are in Default

There’s no simple path for getting out of default when it comes to private student loans. You’ll have to work out something with your lender or hire an attorney. 澳洲幸运5开奖号码历史查询:Negotiating a settlement for less than you owe may be an option. To find an attorney, try the American Bar Association’s website, the National Association of Consumer A♏dvocates, or LawHelp.org.

If you can’t afford to have an attorney represent you, cons꧂ider paying for an hour or two of advice so you can learn what you need to do to represent yourself. You can expect to pay a few hundred dollars for this service vs. several thousand to have an attorney represent y🐼ou.

Additionally, be careful to 澳洲幸运5开奖号码历史查询:avoid student loan scams when you’re looking for help.

Student Loan Refinancing

If you have multiple federal student loans, you can apply for a consolidation loan, as noted above. The 澳洲幸运5开奖号码历史查询:interest rate will be based on your loans’ original interest rates. Unfortunate🉐ly, this means you can’t consolidate your loans into a new loan with a lower interest rate, even if rates are lower now.

To get that lower rate, you would need to refinance your federal student loans into a private student loan. You can also refinance private student loans into a new private student loan.

澳洲幸运5开奖号码历史查询:It can make sense to refinance if doing 𒊎so will significantly lower your interest rate and make your monthly payment more affordable. It can also help you repay your loan faster and pay less interest over the life of the loan.

However, if you refinance a federal loan into a private loan, you will lose the unique o🥃ptions available with federalܫ loans: IDR, loan forgiveness, loan rehabilitation, and possibly deferment and forbearance. So, think carefully before giving up these benefits.

Refinancing might also mean paying an 澳洲幸运5开奖号码历史查询:origination fee, which will vary depending on the lender. Many privat𒐪e student lenders don’t charge them, but if they do, the fee will usually be added to your loan balance or subtracted from your loan proceeds.

Private student refinance loans can have fixed or variable interest rates. If you’re struggling with your current payments, it may be tempting to refinance into a 澳洲幸运5开奖号码历史查询:variable-rate loan because it will probably have a lower interest rate than a 澳洲幸运5开奖号码历史查询:fixed-rate one. Before you do, find out how often the loan’sﷺ rate can increase and by how much. Addition🅠ally, find out what the floor and ceiling are on the variable interest rate. You’ll need to consider whether you would be able to afford the payments if the rate goes up.

You’ll need good credit to refinance at a favorable interest rate. If you’ve already fallen far behind on your payments and your credit score has plunged, then 澳洲幸运5开奖号码历史查询:refinancing might 💯not be a possibility for you. You also need to have a steady income to refinance, so if you’re unemployed, you’ll have to look at other options.

The Bottom Line

Ignoring financial problems never makes them go away, and it often makes them worse. If you default on your federal student loans, the government has the power to seize your income tax refund as well as garnish your wages and 澳洲幸运5开奖号码历史查询:Social Security benefits. Falling too far behind on any type of student loan, federal or private, can also seriously hurt your credit. It can even cause your lender to take the seemingly nonsensical and drastic step of accelerati🙈ng your loan, making the entire balance due immediately.

You can prevent this situation from getting worse and put your loans back on track with one of the options described above. If your situation truly seems hopeless, trying to get your student loans 澳洲幸运5开奖号码历史查询:discharged in bankruptcy might be your best option. That’s poꦇssible, but it's not easy.

Investopedia does not provide tax, investment, or financial services and advice. Readers should consult with a qualified financial professional to determine suitable options and their ramifications given their specific circumstances.