Handling student debt during financial hardship

Handling student debt during financial hardshipThe cost of college has risen to astronomical heights, saddling graduates with thousands of dollars in student loans long after they receive their diploma. If you are up to your ears in student debt and struggling to make monthly payments, there are solutions to your financial problems that will prevent you from damaging your credit score.

First, consider a loan deferment, which temporarily relieves your repayment responsibilities. Also, if it is a subsidized loan, interest will not accrue during this period. Lenders allow this reprieve when the borrower is going through financial hardship, but it is not forever, and although it appears on your credit report, a deferred loan looks far better to creditors than a delinquent account.

There is also the option of student loan consolidation, which lumps all of your accounts into one large loan so that you pay less each month, but for an extended amount of time. While interest rates vary with each year, consolidating your loans allows you to lock in a certain percentage, so it is important to make this move when interest rates are low.

Whatever you do, do not default on your loans – it could seriously hurt your credit score, damaging your ability to secure auto loans, credit cards and more.