Student Loans – Do I Have Any Options?

Arizona Student Loan LawyerNot all debt is created equal.  Student loan debt enjoys special privileges that make it very difficult to eliminate – even in bankruptcy.  However, what most people don’t know is that there are several options when it comes to dealing with your student loan debt, including forbearance, reducing your monthly payment, and even eliminating them completely.

If you are having a difficult time paying your student loan debt it is important to understand that you have options and that you need to act.  Ignoring this problem will not make it go away – in fact, federal student loans can follow you until the day you die!  However, there is hope.  Here are a few things to consider when determining your next step in taking care of your student loan debt:

Federal v. Private

The options you have on your student loan debt depends largely on whether the loan was a federal loan or a private student loan.  If you aren’t sure what type of loan you have you can find out by going to the website for the National Student Loan Data System (NSLDS).  The NSLDS website is operated by the Department of Education and is the central database for student aid information.

You can access the NSLDS site by going to www.nslds.ed.gov .  Through this website you will be able to find information on loan and/or grant amounts, outstanding balances, loan status, and disbursements.

Federal Student Loan Options

If your student loans are federal, you may be able to cancel the loan (meaning you won’t have to pay it back), postpone payments, consolidate your student loans, restore your credit through rehabilitation, or reduce your monthly loan payment based upon your income.

Private Student Loan Options

If you obtained a student loan from a private financial institution, such as a bank, you may have fewer options.  Options such as deferment or postponement of payments will all depend on the terms of your agreement.  If your student loan is private, you should  request copies of your loan agreement to determine what your specific benefits and options may be (or may not be).

A benefit to private student loans is that they typically are subject to that statute of limitations.  In Arizona the statute of limitations on a written contact (such as your student loan agreement) has a six-year statute of limitation.  This means that once you are in default on you student loan that the bank has six years in which to file a lawsuit against you.  If they don’t file the lawsuit, then they are barred forever from suing you.

Another benefit of private student loans is that banks do not have the collection powers that the federal government has while trying to collect on delinquent loans.  Specifically, if you are in default on your private student loan the bank will typically have to sue you and obtain a judgment against you before they can garnish you wages or bank accounts.