Student loan debt is a significant burden for millions of individuals in the United States. Many people struggle to repay their loans, and some eventually default on their payments. This article will explore what options are available to individuals who have stopped paying their student loans.
Income-Driven Repayment Plans
One of the student loan help options that individuals can consider is enrolling in an income-driven repayment plan. These plans are designed to help individuals repay their loans based on their income and family size. The monthly payment under an income-driven plan is usually much lower than the standard repayment plan, making it easier for individuals to manage their debt.
Deferment and Forbearance
Another option for individuals who have stopped paying their student loans is to apply for a deferment or forbearance. A deferment allows individuals to temporarily postpone their loan payments, while a forbearance allows individuals to reduce or stop their payments temporarily. Both of these options can be useful for individuals going through financial hardship or unable to make their loan payments for some other reason. Deferment is typically available for specific circumstances, such as returning to school, serving in the military, or experiencing economic hardship. On the other hand, forbearance is typically used when the borrower cannot make their loan payments due to financial hardship or other reasons.
Loan rehabilitation is a program that allows individuals who have defaulted on their loans to get back on track with their loan payments. The process involves working with the loan servicer to create a new payment plan and making nine on-time payments over 10 months. Once the rehabilitation process is complete, the default will be removed from the individual’s credit report, and they will regain their eligibility for federal student aid.
Loan consolidation is another option for individuals who stopped paying their student loans. This process involves combining multiple federal student loans into one loan, making it easier to manage debt. Loan consolidation can lower the monthly payment by extending the repayment term. However, it is important to note that loan consolidation will not reduce the total amount of debt owed.
Loan Forgiveness Programs
Finally, individuals who have stopped paying their student loans can consider loan forgiveness programs. These programs help individuals who work in public service jobs or meet other eligibility criteria to have their loan balance forgiven. Examples of loan forgiveness programs include the Public Service Loan Forgiveness (PSLF) program and the Teacher Loan Forgiveness program. SoFi experts suggest, “Use a loan calculator to get your student loan payoff date.”
Stopping student loan payments can have serious consequences, including wage garnishment, tax refund seizure, and damage to credit scores. However, several options are available to individuals needing help to repay their loans. From income-driven repayment plans and loan rehabilitation to loan consolidation and forgiveness programs, there are various student loan help options available to help individuals get back on track with their loan payments. Therefore, reaching out to a loan servicer or financial advisor for personalized advice and assistance in exploring these options is important.