In the present world, seeking higher education is
not a trouble. Earlier, students hesitated before taking up higher education
due to higher cost. However, different banks and financial organizations are offering
student loan today. It has made easier for students to attain higher education.
However, at the same time, the number of defaulters is increasing rapidly.
Students fail to pay the money back within a given period and become defaulters.
Three major ways to save yourself from defaulted
student loans
The lender can take severe measures against the
defaulter. However, there are three major ways to revive money. These steps
are- rehabilitation, reinstatement, consolidation.
- Rehabilitation program helps you to overcome from the defaulted status by making nine voluntary payments within a time period of 10 months. If you successfully make payments, the lender will remove the charge that was lodged against you. The defaulter tag will be removed immediately from the credit report. After completion of this program, you will be given nine years and three months to pay back the remaining amount. Another important factor in a rehabilitation program is that the lender will buy your loan to remove your defaulted status. Therefore, unless the lender purchases your loan, you will have to continue payments at regular interval.
- Reinstatement is another procedure to save you from defaulted student loan. In most of the cases, the student loses his eligibility to take federal student benefits. In reinstatement procedure, a defaulter has to pay the amount for six consecutive months before he applies for any other student aid. If you meet this criterion then, the lender will send a copy of this report to your educational institution to inform them that you have successfully repaid the money. Then you can again enjoy your eligibility of federal student benefits.
- Consolidation process offers you a way to secure yourself from the defaulted student loan. In this process, you can associate your current student loan with a fresh Direct Consolidation Loan from the Education Department. However, before you apply for a direct loan make sure that you do not possess another Direct Consolidation Loan. Otherwise, it will not be granted.
However, defaulted students may not have such
detailed knowledge in case of defaulted student loan. Therefore, if you become a defaulter consult with
a loan expert to recover yourself from such turmoil.
Author: Aalina Jones
An experienced finance writer, she offers smart suggestions on
financial topics
2 comments:
Thanks for the tips! Student loans may be the easiest way to get financial help but it can also be a burden.
I think what most students fail to realize is that there are also a lot of commercial loan modification leads that they can take advantage of instead of defaulting. Eitherway, you posted such an informative article here. I am going to share this on twitter if you don't mind. Cheers!
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