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If it turns out that for some reason none of the repayment options makes sense for you, try for a deferment or forbearance. If you're not familiar with these deferment is a period of time during which you don't have to make payments on your principal or interest. You could be eligible for deferment if you're still enrolled in school or are unemployed. To see if you would qualify, you will need to ask your lender or loan servicer. You could ask for forbearance if you find you don't qualify for a deferment. This would allow you to stop making payments on your student loans for up to 12 months. However, the interest on your loans will continue to accrue. If you have an economic hardship, you could qualify for forbearance. However, forbearance be granted only by your lender.
Whatever you do don't default
You'll remember we said earlier in this article that the worst thing you could do is not make payments on a student loan. This is called defaulting on the loan or loans and it's something you absolutely do not want to do. You're considered to be in default the day after you miss a payment. However, this won't be reported to the three credit bureaus for probably six months. This gives you time to work with your loan servicer to get caught up. In the event that you don't fix things then after 270 to 360 days your loan could be turned over to a debt collection agency and things could really get ugly. Your wages could be garnished or a portion of your income tax refunds could be withheld. You will be unable to get any more federal aid and your debt will grow due to the expenses associated with collecting your debt such as court fees and lawyer's fees. You may not be able to enlist in the Armed Forces and you'll be ineligible for deferment. You will be ineligible for assistance under most federal benefit programs and your defaulted loans will stay in your credit reports for seven years and this will have a very negative effect on your credit score.
Last but maybe not least when you default on a loan, whether it's a student loan debt or some other type of loan, you've basically stolen money from taxpayers or a private lender. When you signed up for those loans it was to finance a valuable commodity –your education. In return for that education you assumed an obligation, which was to repay the money. Whether you like to look at it this way or not if you default on your student loans you're not much different from a person that engages in credit card fraud.
Choose a plan and get started
Regardless of whether you're employed or not the best way to take charge of your student loan debts is by selecting a repayment program and getting started. For people just out of school one of the best options is Graduated Repayment. If you were to choose this program, your payments would start low but then increase gradually every two years. This can be an especially good solution if you know for sure that your earnings will also increase over the years. Beyond this, an income-driven repayment program such as Pay As You Earn should take the sting out of your monthly payments by making them very affordable.