NEW YORK (AP) -- If you can't afford to pay your student loan bill, don't blow it off. There are steps that you can take that may save you from financial ruin.
"There are more options than you may realize," says Rohit Chopra, a senior fellow at the Consumer Federation of America, particularly for those with federal student loans.
Not paying can severely damage your credit report. Going into default -- which happens after 270 days of not paying a federal student loan bill, and even sooner for private student loans -- can make it harder to qualify for a mortgage, credit card or prevent you from renting a place to live. And if you have a federal loan, the government can pull money from your paychecks, tax refunds or social security benefits to get you to pay it back.
Here's what you need to do if you can't pay your student loan bill:
PICK UP THE PHONE
Call the company that collects your student loan payments and let them know you're having trouble coming up with the cash to pay your bills. Some student loan servicers have been accused by regulators of giving out wrong or incomplete information to borrowers. You don't have to make a decision during the call. Hang up, do some research on your own and figure out a plan, says Mark Kantrowitz, publisher of financial aid and college scholarship search website Cappex.com.
TRY LOWERING PAYMENTS
If you have a federal student loan, you may qualify for what is known as an income-driven repayment plan, which can make your monthly payment more affordable. Monthly payments can be reduced to 10 percent, 15 percent or 20 percent of your discretionary income. Call your student loan servicer to apply, or do it through their website. To see which income-driven repayment plans you may be eligible for, use the Education Department's online estimator tool at studentloans.gov/myDirectLoan/repaymentEstimator.action .
Lenders of private loans, unlike federal student loans, are not obligated to offer a more affordable payment plan. But some student loan experts say it is still worth asking for help.
Chopra, who was a former student loan ombudsman at the Consumer Financial Protection Bureau, says borrowers frequently complained to the agency about private lenders that were unwilling to modify their loans. The CFPB published a sample letter you can send to the lender to ask for help. Find it at: consumerfinance.gov/about-us/blog/struggling-private-student-loan-borrowers-still-searching-for-help .
POSTPONING PAYMENTS
Options called deferment and forbearance will temporarily postpone payments. To defer a federal student loan, you'll need to prove economic hardship or unemployment. With this option, the government may pay the interest your loan accrues during the deferment.
Forbearance is for those who don't qualify for deferments, but still can't make payments. Interest will still accrue, increasing your loan amount.
Private student loan lenders may or may not offer deferment or forbearance options. You'll need to ask and some may charge fees to do so.
FIXING A DEFAULT
If you already defaulted on your federal student loan, you still have a chance to clean up your credit history. Call your student loan servicer, who can put you on a repayment plan. After several months of payments, the default can be removed from your credit history, Kantrowitz says.
Private student loan lenders do not have to offer this. But Kantrowitz says some private lenders may be willing to remove the default from your credit history if you negotiate with them and agree to start paying them back.
NEVER PAY FOR HELP
All this can be done for free, so stay away from companies that offer to help you with student loan repayment plans or other services for a fee. Many are only doing paperwork that you can easily do on your own, says Betsy Mayotte, director of consumer outreach at the Center for Consumer Advocacy.
And be suspicious of any company touting a so-called "Obama student loan forgiveness program."
"There's no such thing," says Mayotte.
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