Student Loan Default Prevention
- Don't do it. It's easy to fall behind on making payments on your student loan after you graduate, but remember that missing even one payment is a bad idea...so try to avoid it!
- You might get labeled. If you forget to pay your bill by the due date, make sure you pay it immediately to avoid a default penalty (don't wait until your next bill). Most servicers give you 30 days before they report your delinquency to the credit bureaus. Once you get that "delinquency" label on your credit report you can NOT get it removed. The same goes for your parents who may have cosigned your loan.
- No worries. . .automate. Signing up for automatic payment deductions from your bank account will help you stay on top of your loan payments. Of course, you also need to make sure there is enough money in your account to cover the bill.
- Know-it-all. To prevent a default, it's important to know where your loans are serviced and to know your rights and responsibilities as a borrower. Talk to your loan servicer or lender to make sure you have all the information you need.
- The mail must go through. Make sure to let your loan servicer know that you have changed your address if you move. Not letting them know could result in missed mail, and ultimately end in a default on your student loan.
- Ask for help. If you are having difficulties paying back your loan, call your loan servicer or lender to see if they can help. Income-based and graduated repayment options are available, or they might be able to extend your repayment period. Don't wait until you've defaulted. . . ask for help as soon as you need it.
- More school, more time. If you are enrolled in school at least half-time, you are eligible to defer your federal direct student loan payments until after you graduate or drop below half-time status. You may also be able to defer some private student loans as well (check with your lender or servicer).
- Life is hard. If you are facing certain hardships that make it difficult to pay back your loan there are some deferment and forbearance options available. Talk to your loan servicer to discuss your options.
- Loans aren't free. Ultimately, you will need to pay back your student loan. In general loans can’t be forgiven (even if you file for bankruptcy). So remember to ask for help if you need it.
Additional student loan and college planning resources
- Maintaining Good Credit
- Student Loan Cosigner Release Option
- Postpone Student Loan Payments: Reasons for Deferment
- Avoiding Student Loan Forbearance
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