student loan help

Because so many people are struggling financially in the current market, more and more people are dealing with educational loans that they do not have the ability to pay. Unfortunately, this may end up in default.

Your student loans are officially in default when you are 270 days past due. At this point, your lender will transfer your loan to either the Department of Education or a state guarantee agency who will take over the collections of your account.

Unlike some other debts, defaulted student loans are not something that is just going to go away. These debts are not dis-chargeable in a bankruptcy without a special waiver of hardship. Additionally there is no statute of limitations on the collections of student loans. This means that defaulted student loans will follow you until you pay them!

One option that you may want to consider is entering into the student loan rehabilitation program. To do so, you will need to contact your lender and see if this is an option.

While the student loan rehabilitation program was once offered to everyone, issues in the lending market have made it a bit more difficult to be able to enter into this program. This is because when you enter into the program, the guarantee agency that currently holds your loan must seek a lender to purchase the account once your loan is rehabilitated. This is who the account will be transferred to when the rehabilitation process is complete. This issue in the current economy is that they are having a hard time finding lenders who want to purchase the accounts.

However, there are lenders who will allow you to rehabilitate your loan. Once you enter into the program, you will be required to make nine on time payments over a 9 month period. (If your loan is a direct loan you will be required to may nine on time payments in nine months.) Once these payments are made, your loan will be considered rehabilitated and the default status will be removed from your account.

The amount that you will be required to pay will be determined through negotiations with your account holder. While they may push for something that is more than what you feel you can afford, you need to make sure that the agreed upon payment is within your means. Since August 14, 2008, you are only eligible to enter into the rehabilitation program one time for each loan. You want to make sure that you are able to complete the payments and get your loan out of default!