The good news is that you have a lot of options to help you avoid having a defaulted student loan.   While the federal government can be difficult to deal with, they have taken great measures to have flexible options available to those who are having trouble making their payments.  Let’s look at a few!

Deferment

If you are unemployed or have returned to school, you may qualify for student loan deferment. This is the best option for your student loan payments if you qualify!  This allows your payment to be suspended for a specific period of time.  During this time, no interest will accrue.

Forbearance

Another option is student loan forbearance.  This works in a similar way to deferment.  The major difference is that interest still accrues while your payments are suspended. The major downside is that the amount you owe will continue to go up until you begin making payments again.

Graduated Payments

If you have recently graduated and are having trouble making your full payment, you may consider getting graduated payments.  This is where your payment will starts off small in the beginning and then increases over time.    Like forbearance, the down side to graduated payments is that the amount that you owe will increase over time.

Income Based Repayment

Income based repayment is designed to help people with low incomes afford their monthly payments.  Essentially it sets caps on the maximum payment based on your income and family size.  Typically, payments will be 10% or less of your total income.  This can be even lower for extremely low incomes.  If you make payments for 25 years under the program, any remaining debt is forgiven.  Also, if you are 150% or more below the poverty level, no payment will be required.