I Can't Pay My Loan-student Guidelines For Recovery
By Jay Moncliff, Thu Dec 8th

You graduated and now your student loan is due. The job hasn'tcome through yet, or you are just in over your head. What canyou do about that student loan?

Before you enter the default stage, relax and review youroptions. Realize that you aren't alone. Unfortunately, since somany former students default on their loans each year, theDepartment of Education has a well-oiled process of collectingpayments from those who default.

If you just stop paying, or never begin making payments whenthey are due, you can expect the Department of Education to takeaction to collect your student loan. There are several drawbacksto procrastinating. First, they will add substantial collectionfees to your outstanding balance. You owe enough already, butthey are going to want extra to track you down and force you topay.

The IRS works closely with the Department of Education, andthey'll take any tax refund that you might be due. That's right,they'll turn it over to the Department of Education without asecond thought.

Finally, once you do get a job, they can garnish your wages. Notonly will they get the collection fees and hit your take homepay, but your employer will know you defaulted on your loans aswell.

If you default, your credit will be damaged. This will preventyou from getting the best available financing deals, a mortgageand possibly even a job.

Want to avoid all that hassle? First, realize that you do haveoptions. Shirking your responsibilities should be the lastoption. Contact an Ombudsman at the Department of Education(877-577-2575). Review your options and choose one that you canlive with.

You may be able to defer your loans. This program allows you todefer, or put off, payments on principal, interest or both undersome conditions.

If you're out of work but looking for a job,experiencing a financial hardship or going back to school youmay be able to put off paying for awhile. You must apply and beapproved, so be proactive and request the paperwork from yourlender before you find yourself in default.

Most loans have a provision for cancellation. However, cancelinga student loan is very difficult. If you meet one of therequirements you can apply for a cancellation by completing aform provided by your lender. Some of the qualifications includetotal disability, either permanent or temporary, death,providing instruction or other services to needy populations orentering a rehabilitation program for your disability. Servingin one of the armed forces may also allow you to cancel yourstudent loans under certain circumstances. Cancellations arehard to obtain and will always require documentation of yourcondition or situation.

If you find yourself in extreme circumstances, student loans canbe discharged through certain types of bankruptcy. However, youmust be able to prove that if you repaid the loan you wouldsuffer severe financial difficulty, and most student loans canonly be discharged through Chapter 13 bankruptcies in which youmust repay a portion of your debt (usually pennies on thedollar).

Whatever your situation, deal with your student loan problembefore it enters default. Whatever choice you make, don't ignorethe problem. It won't go away, it'll only get bigger. Contactthe Ombudsman at the Department of Education or your lenderbefore you find yourself in default.

About the author:Jay Moncliff is the founder of http://www.saving-loans.com a website specialized on Loan, resources andarticles. This site provides updated information on Loan. Formore info visit his site: Loan