What to do with your student loan if you are in default

student loanAbout $67 million student loans are currently in default in the U.S. If someone hasn’t made a payment on a student loan for more than 270 days, then it is considered in default. Loans have been issued by the Department of Education (DOE) and there are 23 private debt collecting companies working for the DOE to collect on your debt.

Unlike your credit card debt or past-due mortgage payments, student loans are rarely discharged in a bankruptcy. The Federal government can garnish your wages; withhold your tax refund or Social Security payments to pay for your student loan.

If you received a call from a debt collector on your student loan, there are ways to handle the situation. If you qualify as a low income earner, you may qualify for a lower monthly payment than what the debt collector asked you to pay. This is under a Federal program that allows low-income persons to adjust their monthly payment according to their income.

If you are in default, you can also get back on track and restore your credit rating. If you make nine payments in a 10 month period, you can get your loan status out of default.

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