6 Student Loan Rights You May Not Know

Repaying student loans may cause a few headaches and, with an unpredictable job market, the stress may be even greater. The weak job market is causing many college graduates to defer their payments for a later date.

A recent study conducted by TransUnion found that more than half of student loans are currently in deferment. Between 2007 and 2012, student loans have increased 75 percent, with the average debt per owner $23,829. This is a tough position for many post-grads, but it is important to keep a level head about the situation. Every borrower of a student loan has certain rights, and knowing these is the best way to lessen the pressure and look out for your financial future.

  1. Counseling
    Knowing what you are getting yourself into will help you navigate the unfamiliar waters of student loans. A great way to steer yourself into the right direction is to set up a counseling session. Federal law requires a loan provider to address all the terms and definitions of a loan to a borrower. However, Student loans take this rule one step further and require each borrower to perform an entrance and exit counseling session. Working with your loan counselor will help guide you through the rules and regulations that come with your loan. When you have finished school, an exit counseling session can better prepare you for the regulations that go along with repaying your student loan.

  2. Contact a loan servicer
    When you sign up for a federal student loan you will fill out a Master Promissory Note. This document outlines all the rules and regulations regarding your loan. This legal document may read like stereo instructions, but you have the luxury of calling up your provider at any time and ask them about any rules that you find confusing. This may sound similar to a counselor, but you can call your provider any time after your counseling session about any inquiries. 

  3. Amount of income

    Finding a job right out of college may be tough for a few individuals, but federal loans come with a few rules to make them easier to repay. Depending on the circumstance, college graduates have the right to defer payment. If you are in the military or have decided to enroll in grad school, you can wait to pay back these loans until you are finished with your commitment. There is also a hardship deferment which is granted to those who are unemployed. If you are unemployed, you may only defer payments for up to three years.

    There are a few repayment programs that can work around your income situation. A pay as you earn plan limits your monthly payments to 10 percent of your discretionary income, while an income-based repayment plan bases your payments on 15 percent of your discretionary income. There are a variety of repayments plans, so it will benefit you to research as much as you can before you sign up for one.
  4. Consolidate your payment

    If you have taken out several loans, you will then need to make minimum payments for each of those accounts every month. In the interest of simplicity and convenience, you may have the option of consolidating your federal loans into a single payment each month. This method is very common and will alleviate the stress of making multiple monthly payments.
  5. Loan forgiveness

    In certain situations, you are allowed to have your balance forgiven if you have made a certain amount of payments. If you have a career in early childhood education, public health, law enforcement, emergency management, the military or a government job you are eligible to have your loan forgiven if you have made at least 120 payments under the Public Service Loan Forgiveness Program. If you fall under any of these categories you may want to investigate and see if it is right for you.
  6. Extend payment

    There are ways to lessen your monthly minimum payments, but this method will extend your payment schedule. The standard window for a loan payment is generally about 10 years. However, those who may have trouble making their monthly payments can investigate changing the payment schedule length. An extended repayment plan of 25 years is available to decrease the amount of each monthly payment. Keep in mind, however, that the additional time it takes to repay your loan will also increase the amount of interest you will have to pay on it. This may be a good route for some to take, but look into it further and decide whether it is good for you.

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