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Student Loan Repayments: Several Options in the Hard Times

Most of us go to universities presuming that student loan repayments will be easily paid by greater income a university tile promises us. Reports say that the average student debts presently is around $21,899. What is worse, the student loan default rates are rising, so the number of people who went into trouble is increasing. In 2008, Citigroup wrote off 2.3% of student debt. So did SLM Corp (Sallie Mae) that wrote off 3.4% of troubled loans.

All university graduates got themselves a six month repayment holiday on the federal student loan. Sadly this also means that loan forbearance and loan deferment have become a necessity.

Loan forbearance allows a graduate to put off his or her repayment for up to three years. It really helps tackling short-term financial trickiness, but in the long run you will start dragging it like a tail that just gets bigger and bigger. For instance, not making repayments for 12 months on a $30,000 student loan at 7% will add $2,100 to the amount you owed. Loan forbearance lasts for a maximum of 12 months.