student loans consolidation advise
As a student, you may apply for a federal student loan or pursue a private student loan. You need to understand the differences in these two types of loans if you encounter difficulties in making repayments.
The government’s ability to sue for collection of defaulted federal student loans depends on the amount of time repayment has elapsed. If payments have not been made for nine months, the loan is in default. At that time, the entire loan balance becomes due. You can default in other ways besides failing to make payments. If other terms of the loan contract are not met in the nine month period, this can also constitute a default.
When you miss a payment, the next day after the due date, your loan is considered delinquent. At that point, the lender is obligated to notify you about the delinquency. The lender must send at least one written notice or collection letter during the first 15 days. The longer a student loan is delinquent the more pressure is applied in number of notices and other tactics. But there are “default aversion” programs sponsored by guaranty agencies to help you during the delinquency period. The lender also must alert you to the availability of the Student Loan Ombudsman.
The Student Loan Ombudsman of the Department of Education will informally research a student’s problem and determine if you have been treated fairly. The Ombudsman is not an advocate or someone who will automatically take the student’s side. The Ombudsman must consider all sides in an impartial and objective way.
You should beware of all the possibilities available to help in your situation before turning to the Ombudsman program. It is possible to work with the lender to postpone payments or find an alternate solution to the delinquent payments. You must notify your lender if your address has changed. It is still your responsibility to make your payments even if you didn’t receive your statements.
Ask your lender for a statement that shows all payments made to your loan account, if you are in doubt about the balance. If you are sure payments were made to your account and not recorded, you will need to furnish proof of payment. The lender will need a copy of the front and back of the canceled check. On the back of the check will be the information that can locate a missing check. Copies of your checks can be obtained from the bank or credit union.
The government has considerable power in collecting defaulted student loans. These are some of the methods that they can use:
- Garnish wages
- Partially withhold Social Security benefits
- Deny new student loans and grants
- Levy large collection fees
The Student Loan Ombudsman suggests using these tips when dealing with your lender:
- It is usually best to communicate with your loan servicer in writing, because you’ll have a physical record of what has been said and done.
- Keep a record of events. If you speak with someone on the phone, make a note of whom you speak to and when, and what was said. If you use the mail, keep a copy of your letter and of any replies you receive.
- Keep the evidence. Retain the originals if you are asked for them. Send letters via certified mail, with a return receipt requested.
- Stay calm. If you have confronted someone directly, don’t let the emotion of the moment get to you. If you are clearly not getting an adequate response, simply take the next step in the procedure for resolving your problems yourself.
- Write clearly and concisely. Be polite and courteous, but don’t be afraid to convey the detail of any incident and to articulate your concerns. Write down the facts in a logical order and stick to what is relevant. Remember to include important details like your account number or social security number. Put these details at the top of your letter.
- Agree on a reasonable time to expect a response. Ask for a response in a reasonable time, and be sure to tell the person how you can be reached.*The Federal Student Aid Ombudsman of the Department of Education
Instead of a federally funded loan, students sometimes arrange a private loan. Federal student loan programs sometimes fail to keep pace with student needs. The private loan business has grown quickly to meet this demand. Private loans terms are usually inferior to federal student loans. The fixed rate and repayment terms are not regulated the way they are for federal loans. This makes private loans more risky and expensive. If you miss a payment on a private student loan, your loan immediately goes into default. The loan contract will have a description of the default period. An example of a private student loan contract can read that you are in default if you:
- Miss a payment when due
- Break other promises in the loan note
- Become insolvent
- Die
- Declare bankruptcy
- Provide any false written statement in applying for any loan subject to the terms of this note or at any time during the term of the loan
- According to the lender’s judgment experience a significant drop in your ability to repay the loan
- Default on any loan you all ready have with this lender, or any loan you might have in the future.
As with the federal student loans, if you fail to receive a monthly statement, it does not relieve you of the responsibilities and obligations of your contract. You as a student should always exhaust all your federal grant and loan options before taking out a private loan.
Student Loans Consolidation Advice 
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