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Climb Out of the Delinquent Loan Pit

It can happen to the best of us. One day, you’re enjoying life to the fullest, not letting your student loan bills get you down. But then suddenly, whether you realize it or not, you’ve fallen into the delinquent loan pit.

The longer you stay trapped in the delinquent loan pit, the more severe the consequences can be. You’ll need to prepare to hike out of delinquency – but how? That’s where we can help.

Late Student Loan Payments

When life circumstances change, it can be hard to keep up with reoccurring student loan bills – especially when you’re focused on making ends meet. Sometimes, you’ll find a few months after your grace period is over that you just can’t keep up with the unaffordable monthly payments. Unfortunately, you’ll land in delinquent loan status when you pay late or not at all.

Becoming Delinquent

Your loan becomes delinquent the day after an overdue payment until the time you catch up. Your account stays delinquent until you repay the entire past-due amount or make other arrangements with your loan servicer. And if you have a private student loan, you may face a late fee for any loan delinquency.

If you fully pay a day or two past your due date, you’ll avoid further trouble – but the situation escalates if you never pay at all.

Effects of Delinquent Status on Credit

A late student loan payment affects more than your relationship with the loan servicer – it can do lasting damage to your credit report. After your loan is delinquent for 90 days, you’re considered to be in serious delinquency, which means you’re more likely to default on your loans. At this point, student loan servicers report your delinquency to the three major credit bureaus.

Poor credit can make it difficult to qualify for things like:

With a lower credit rating, you can also struggle to sign up for utilities, get a new cell phone plan, or even get approval for an apartment rental. And even if you are approved for new lines of credit, it’s unlikely you’ll get a decent interest rate. When your credit score is tarnished, it takes time and effort to prove to loan lenders that you deserve good interest rates.

Delinquency and Default

While you may have heard these terms used interchangeably, they’re two different things. As you now know, delinquency occurs the day after you miss a payment.

Student loan default, on the other hand, occurs after your loans have been in delinquency for a specific period of time depending on the type of loan. This time period can typically be found in your student loan agreement.

For instance, most federal loans will fall into default when you haven’t made payments in 270 days. However, this timeline differs for federal Perkins loans and private student loans. Perkins loans can do into default the day after missing a payment. The timeline for default will vary for private student loans depending on the terms, but generally private loans go into default after 120 days of delinquency.

Once a delinquent loan falls into default, the entire loan balance will become due immediately. Borrowers in delinquency lose many of the previous benefits of their loans, like refinancing, and become unable to take out any more student loans. Default also comes with a much more dreadful set of consequences than delinquency, like tax refund and wage garnishment.

Not sure if you’ve fallen into default yet? Contact your lender or call a student loan services company like ours to get to the bottom of it.

Stop Trying to Make Payments You Can’t Afford

Did you know you’re not stuck with your current student loan repayment plan? That’s right. You’re not even stuck with your high student loan interest rate. You have options.

Many plans offered by your federal or private loan servicer will allow you to catch up on payments with a lower interest rate, and even get ahead. You also can always explore the world of student loan refinancing or consolidation, which can help make repayment a little easier.

Let Us Help You Get Out of the Delinquent Loan Pit

Whether you want to pay less in more installments or pay more to speed up paying off your debt, our team can help you vet the possibilities. We can also look into other options for both short-term relief, like forbearance and deferment, and long-term relief, like student loan forgiveness. We’ll go over the positives and negatives of each, so you can feel confident in your decision.

At the end of the day, our team of Student Loan Advisors are armed with the experience and skills you’ll need to find your way out of the delinquency pit. Once you’re out of that trap, you’ll be able to enjoy life again the fullest, without the threat of default right around the corner.
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