Furthermore, it’s possible to defer student loans for up to a period of three years. Forbearance, on the other hand, https://badcreditloanshelp.net/payday-loans-ia/ is a protection only offered for up to 12 months. As of the first quarter of 2019, there are an estimated 3.4 million federal student loans in deferment and another 2.7 million in forbearance.
Private student loan repayment
It’s easier to default on private student loans than on federal loans. In some cases, a private lender will consider a borrower to be in default after a single missed payment (though they often aren’t considered to be in default until three months go by without a payment). Unlike federal loans, there’s no single threshold for being in default; the rules involved are spelled out in individual private loan agreements.
Borrowers who fall behind on their private student loan payments will see their credit scores decline. Additionally, private lenders can send outstanding loans to collections agencies once borrowers fall behind on payments. Those that have trouble collecting their debt can then sue borrowers for repayment. Once a judgment is obtained in a private lender’s favor, that lender can pursue remedies such as wage garnishment.
Many private lenders have deferment or forbearance programs, though borrowers typically need to make a compelling case to be eligible for them. Under both programs, however, interest continues to accrue on outstanding debt during the time in which payments are paused.
As of the end of the first quarter of 2019, % of private student loans are considered to be in repayment, according to MeasureOne. Of those, however, 1.5% are 90 days or more past due, which generally means they’re in default. Meanwhile, % of private student loans are in deferment, 2.18% are in forbearance, and 2.44% are in their grace period.
Income-driven repayment plan use
Those who take out federal student loans can apply for an income-driven repayment plan if they’re struggling to keep up with their payments. Continue reading “Key takeaways: Student loan debt is a continuing problem”