Home > 2013 > Students

Help! I’m Unemployed & Drowning in Student Loan Debt

Advertiser Disclosure Comments 1 Comment

It’s not uncommon for college graduates to walk across the stage not knowing what awaits them on the other side. The current economic crisis has created an extremely competitive job market, leaving recent college graduates with limited options.

Unfortunately, loan providers do not always have a soft spot in their heart for grads who are going through a rough patch. According to the College Board, 14% of borrowers have at least one delinquent loan, which amounts to a whopping $85 billion.

If your student loan debt is no longer eligible for deferment and you do not have the means to remit timely payments, here are a few suggestions:

Notify Your Lender

If you have not already done so, notify your lender immediately. They will be able to educate you on your options and possibly make payment arrangements that are feasible for your current financial situation. Ignoring calls about outstanding student loan debt will only exacerbate the problem and force the lender to take adverse action against you.

Request an Extended Loan Term

Amortizing the amount of the loan over a longer period of time will lower the monthly payments. However, the interest paid over the life of the loan will increase, so be sure to only extend it for a small number of years to keep the overall cost of the loan at a reasonable amount.

Apply for a Forbearance

A forbearance grants temporary relief for a specified period, typically up to 12 months. However, it is important to understand that the interest will continue to accrue. “What the lenders or their loan-servicing company agents don’t always explain is that forbearance isn’t forgiveness — the interest that is not paid during the relief period will be added the loan balance, which will only make matters worse later on,” says Mitchell Weiss, a financial services industry executive and Credit.com contributor, in a recent interview. Therefore, you should only exercise this option when no other options are available.

Income-Based Repayment and Income-Contingent Repayment Plans

Available only to federal loan recipients, these programs make payments more affordable. IBR plans adjust the monthly assessment so it equals 15% of your discretionary income. The ICR uses a system that factors in income, family size and the outstanding debt balance to calculate the monthly payment. After a period of 10, 20 or 25 years, the loan balance may be forgiven, but this varies by loan program.

The Bottom Line

Temporary relief from student loan debt may provide a quick breath of fresh air, but can be extremely dangerous in the long-term. In some instances, additional fees may be assessed to take advantage of these opportunities, particularly with private lenders. If at all possible, cut costs and allocate any available funds toward repayment efforts. Also, seek job opportunities that offer loan forgiveness.

Image: iStockphoto

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: Monday’s need-to-know money news()

  • Nursing student

    I had an agency originally posting as a debt consolidation company (which may be the case, but I have already consolidated) wanting to take my case in asking the student loan holders to provide original documents to my debt and if they can’t provide them…ask them to drop the debt? Even saying that every time they contact me I will get to “claim’ violation fees set by the FTC. I am trying to figure out if this makes any sense to anyone? The company is in florida and the attorney who does ALL the work is O T T O BerGES…do you have any insight for me?
    Is this legal? Do they drop loans when the new owner of the loan can’t provide documentation?

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team