Struggling private student loan borrowers, who have gone into default, and having trouble making ends meet, have options. The Consumer Financial Protection Bureau, who has studies 5,300 private student loan complaints, have reported that of the over 5,000 loans analyzed during a one year period, complaints rose by more than 37 percent, most of them centered on lack of options available for modifying the loans. The bulk of the complaints were centered on:
1. Borrowers unaware that they had options to lower the payments or restructure their debt.
2. Borrowers not yet earning sufficient income, and having a large balance due all at once.
3. Borrowers complaining that servicers did not offer repayment plans, or forbearance plans that required a larger payment when the balance became due.
While forbearance typically ends one or two years after graduation, the interest rates of yesteryear, 1% and 2% are just that, a thing of the past.
Todays students face 4, 5 and even 6 percent interest when in reality, just starting out in the workforce, they are making half of their expected salary.
According to the Consumer Financial Protection Bureau, more than 7 million Americans are currently in default on student loans, totaling more than 1.2 trillion in outstanding loan debt.
To combat this, student loan companies are offering their borrowers options to avoid default. Options consist of:
- Debt restructuring
- Lower payments due on financial analysis of income/expenses of individual borrower
- Longer amortization schedules – extending life of the loan
Default in student loans, which results in derogatory information on the student borrowers credit score, has a lingering affect, catapulting into hurting the borrowers chances when applying for a job, obtaining a loan for housing, or renting, and so many other effects.
At my firm, we have years of experience negotiating student loan debt and can speak to your loan provider to see what options exist for you. If you are treading water and barely making ends meet, default is not necessary.
The best advice is to speak to a professional to intervene and seek lower payments and/or lower interest rates. We are here to help. The first consultation is always free of charge.
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