6 tips to manage student loan debt

By Alex Veiga

Associated Press

Published: Wednesday, May 8 2013 12:00 a.m. MDT

If you don't qualify for a deferment, you may request a forbearance, which can generally buy you up to 12 months without making payments. However, you'll continue to pile up interest on your balance, even with subsidized loans. For more details on how these options work, go to this U.S. Department of Education website: Studentaid.ed.gov


Missing payments on your federal student loans can seriously hamper your ability to get credit, especially if you're starting out and don't have much of a credit history.

In the case of federal student loans, you will be declared to be in default if you miss nine payments in a row. At that point, the government will ask you to pay back your entire loan balance immediately, and will resort to garnishing your wages or taking it out of your income tax refunds if need be.

The default threshold is generally crossed far sooner with private student loans.

Experts recommend contacting your lender as soon as payments become a problem to discuss options.

Keep in mind, unloading your student loan debt via bankruptcy is very difficult, though not impossible. You'll need to persuade the court that what you owe on your loan will result in an undue hardship on you and your dependents. Of course, even if you succeed, filing for bankruptcy has steep and long-standing consequences on your ability to get credit.

For more details on this option, see the National Consumer Law Center's website on student loans: www.studentloanborrowerassistance.org/bankruptcy .


One way to lower the total cost of your loan is to pay a little extra every month, or even make an extra payment every few months. That will help bring down the principal. Ascher's organization recommends including a written request to the lender to ensure the extra payment amount is applied to the principal, not interest or other fees due.


Consolidating several of your student loans can help you manage your debt because you only need to keep track of a single monthly payment. You can also extend the repayment period.

However, if your federal loan predates July 1, 2006, it's likely it has a variable interest rate, which means you can probably get that rate lowered now. Consolidating loans issued after that date may not save you as much money on interest payments, however.

Keep in mind that if you take out a private student loan to consolidate federal loans, you will lose access to the borrower protections built into those loans, such as unemployment deferments.