You went to school with high hopes. You planned to get a great paying job. But now, you don't have a high paying job, and you can't repay your school loan. Sadly, this is an all too common story. Many students start school but can't finish due to family commitments, medical problems, or other issues.
Some students even attend training or vocational schools only to have the school cease operations, so they cannot finish their education.The saddest part is that when you first become a student you are young and full of hope. You assume you will finish your courses and everything will work out. It's only later when plans don't unfold as you had hoped that you are stuck with a school loan you can't afford to pay, and no hope of ever having the money to pay it back.
What are my options for dealing with a school loan?
Your first option, of course, is to repay it in full. This may mean taking a second job, getting a part time job, or cutting your expenses so that you can afford to repay it on your own. By doing this you preserve your good credit.
Of course if you don't have sufficient income to repay it on your own, you must look at other options.
You can contact your school loan lender and ask for an interest deferment, or perhaps an interest reduction until you get back on your financial feet.
You can also try for a school loan consolidation loan. To do this, you approach a bank, trust company, or credit union and ask them to loan you enough money to repay your student loan. Obviously this does not reduce the total amount you owe, but you may be able to negotiate more favorable terms of repayment.
For example, if you have three years left to pay on your school loan, your school loan consolidation loan may be amortized over five years or even longer, so your monthly payments can be drastically reduced.
If you have a cosigner, they may be able to cosign your school loan consolidation loan, which may give you a better interest rate. With a lower interest rate, more of your monthly payment goes towards the principal owing, so you get out of debt faster.
If you have outside security, like a car or house that you can pledge as security, it may be possible to use that security to get a school loan consolidation loan.
Start by talking to your bank, or approach other lenders, and with your budget in hand you know what you can afford, and that's the first step in negotiating a school loan consolidation loan.
