Do student loan repayment plans
March 27, 2015 9:46 PM   Subscribe

My student loans are past-due and I can't afford the minimum payments. I need more assistance for the next two years and I'm concerned I won't be eligible anymore. The loan servicers website offers income-based repayment plans along with other options, but support isn't available to answer questions until next Monday. I'm really freaking out... Can anyone shed some light on the consequences of repayment plans, deferments, and forbearance?

I took an extended break after graduated from a 2-year college and didn't realize my loans exceeded their grace periods and are already past due. I have two loans.. both are from the U.S. Dept of Education, but one consolidated from a previous college attempt and the other is a Stafford loan from my recent school. My loan servicer offers repayment plans to help, but I'm concerned if I take the "Income-based repayment plan" it will disqualify me from further assistance. I've plan to start at a 4-year school this Summer and require loan assistance to finish my degree. I can't find any information online and customer service isn't available until Monday morning.
posted by isopropyl to Education (11 answers total) 3 users marked this as a favorite
Any reason you can't wait until Monday either?
posted by oceanjesse at 9:52 PM on March 27, 2015

Response by poster: Stress mainly, but you're right I can't do anything now without potentially making things worse.
posted by isopropyl at 9:58 PM on March 27, 2015

If you are in default on your student loans, there are ways to fix it, and this may need to be done before you become eligible for additional loans. However, it looks like getting out of default can be done fairly quickly.

Information about student loan repayment plans in general is available here.

There are a variety of options for repayment plans, and based on my experience, the plans do not disqualify you from taking additional federal loans. Going back to school typically means that your federal loans go into deferment, so you have no loan payments due while you are in school.
posted by Little Dawn at 10:16 PM on March 27, 2015 [1 favorite]

Also, a forbearance is "a period during which your monthly loan payments are temporarily suspended or reduced. Your lender may grant you a forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), increasing the total amount you owe."

A lender will likely grant a forbearance while your application for an income-based repayment plan is processed. There are a lot of options for managing your loans, and your school's financial aid office may also have staff available to help guide you through the process and figure out which plan works best for you.
posted by Little Dawn at 10:31 PM on March 27, 2015 [1 favorite]

Forbearances are provided upon request, nearly universally (because you still owe interest during that time, and basically they just want to know that you are aware of the loans and are trying). Maybe ask for a deference first, to see if you qualify, because that is better (no interest).

Also income-based repayment plans were set up for basically exactly your situation, and I have seen nothing that would indicate that enrolling in that would make you ineligible for future loans. In fact, I think it is common for folks to have some gaps between schooling. In my experience, loans taken out for separate instances of schooling are treated differently -- for example, my undergraduate loans became immediately payable again when I finished graduate school, but my graduate school loans were still in a grace period for 6 months following my graduation. That being said, going back to school should automatically put your loans in deferment.

I totally get why you are freaking out, and have been there, but there really is nothing you can do until Monday. In my experience, the student loan people are generally helpful and knowledgable about situations exactly like yours, and will help you navigate the situation then. Good luck, and try not to worry too much until then.
posted by likeatoaster at 7:14 AM on March 28, 2015

I want to emphasize what likeatoaster has said: the federal student loan people are rare amongst monolithic agencies in that they are very knowledgeable and quite helpful. There are also lots and lots of people in your situation and the agency has strong incentive and policy to help right now. I've been right where you are and it's pretty terrifying but you have options. Start a list of the reassurances or answers you need from the loan people, so you can have a productive conversation with them, but try not to dwell on it.

But Ask Heather Jarvis has good information about student loans and student debt and how it works, if it will help you calm down to have more information.
posted by crush-onastick at 7:49 AM on March 28, 2015 [1 favorite]

Don't stress. I've let mine go and ended up in default before, and then sorted it out. There are income-based plans that will even knock it down to zero if your income is low enough. Call them Monday. Every one I've ever talked to was super nice, willing to guide me right through what paperwork I needed to fill out, etc. It was nowhere near as terrifying as I'd expected it to be.
posted by stormyteal at 7:50 AM on March 28, 2015 [1 favorite]

I spent two years with my undergrad Stafford loans in an income based repayment plan and they were more than happy to give me more loans when I started grad school. What kind of "assistance" are you worried about being ineligible for?
posted by MadamM at 9:53 AM on March 28, 2015

Was in the exact same situation as you two years ago. Called their customer service line and said "Hey, I just found out that my loans are past-due but I can't afford to pay ANYTHING right now. I'm [out of a job, looking for work, etc], having a financial emergency and need to put my loans in forbearance until I get this sorted out." Make sure to ask if they can put off the payment that you owe them right now as well.

You can put your govt loans in forbearance for up to a year without penalty -- you won't have to make payments, but interest will continue to accrue -- and that should buy you enough time to get everything sorted out.

Note: If you don't sort this out, you might not be eligible for financial assistance at a future college/university, so get it fixed now, not two weeks before you start 4-year.
posted by Snacks at 1:27 PM on March 28, 2015

I have not used this service (yet), so I can't give a personal recommendation, but if you think it might be better than freaking out on your own, you can check out Student Loan Insider.
posted by Jane Austen at 3:44 PM on March 28, 2015

Call them. Seriously. Don't do the online thing; call them. I've had darn near crippling anxiety around money for years, and am finally, at 37, dealing with tens of thousands of dollars of debt, including $25k+ in student loans. I took extra meds and called the student loan people. The guy on the other end was super duper awesome and friendly and helpful. He was able to get me into a program where I pay $5 a month. Seriously. Call your loan people.
posted by The Almighty Mommy Goddess at 10:41 PM on March 30, 2015 [1 favorite]

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