I need help with my student loans

The burden of repaying student loan debt is overwhelming for many college graduates. According to Mark Kantrowitz of FinAid.org, there is an estimated $730 million in outstanding federal and private student loan debt and only 40 percent of it is actively being paid. What’s even worse is that most people will spend 10 years or more repaying their debt.

According to the U.S. Department of Education, 67 percent of students graduating from four-year colleges have student loan debt. That’s approximately 1.4 million students graduating with debt. Common types of loans include subsidized (where the government pays the interest while in school) and unsubsidized  (where interest accrues while in school) federal loans.

In addition to federal loans, the National Consumer Law Center reports that the number of private loans taken out has increased over the last few years. Unfortunately, private loans are often more expensive than federal loans and there are typically fewer options for repaying the loans.

Repayment is the only option for getting out of student loan debt. Most student loan debt is not dischargeable in bankruptcy.  Even after death, lenders can seek repayment from your estate. While student loan debt may feel like a never-ending nightmare, refusing to repay the debt can lead to dire consequences. Some include:

  • a damaged credit report;
  • additional collection costs;
  • wage garnishment of 15 percent of your paycheck and withholding of social security;
  • the inability to renew a state professional license;
  • legal action against you for the total amount owed; and
  • having your tax refund withheld.

If student loan debt repayment is weighing you down, contact your student loan provider and ask about different repayment plan options. You can also research your options online.  For example, YouCanDealWithIt.com offers excellent solutions for repayment help. Some common options include:

Level repayment schedule - The monthly amount remains the same throughout repayment.

Graduated repayment schedule - Monthly payments are expected to increase as borrower advance in his or her career.

Income-based repayment - Plan is for borrower who is experiencing extreme financial hardship. Monthly payments are extended past the standard 10-year payment schedule.

Income sensitive repayment - The monthly payment amount is based on borrower’s gross monthly income and student loan debt.

25-year extended repayment – Payment option for borrowers whose balance is at least $30,000. The first loan must have been disbursed on or after October 7, 1998.

There are additional options to dealing with student loan debt such as delaying payments through deferment or forbearance.  Under rare circumstances, loans can also be discharged. To see if you qualify for the Loan Forgiveness program visit, FinAid.org.

Need help understanding your student loans?  Unsure what programs are available to help you pay back your debt and get your finances in order?  MMI now offers student loan counseling.  Our trained counselors can help you understand your options and create a plan to get your student loan debt under control.  Visit our Student Loan Counseling page for more details.

Renee McGruder is a former communications coordinator and grant writer at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.