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Debt Relief - Finding Legitimate Alternatives to Student Loan Consolidation

  • Published: 2010-08-14 (Revised/Updated 2011-07-29) : Author:
  • Synopsis: Under certain circumstances you may be able to cancel your student loan obligations defer payments or negotiate a more suitable payment plan.

Main Document

Under certain circumstances you may be able to cancel your student loan obligations, defer payments, or negotiate a more suitable payment plan.

Consider the following options if you find you can't keep up with your student loans:


Deferment is when you put your loan on hold while you are still in school, can't find a job, experiencing financial hardship, raising preschoolers, or become disabled. Your loan still accrues interest or the federal government makes interest payments in the case of Stafford loans.


Forbearance is when your lender allows you to postpone or temporarily reduces payments due to financial hardship. You have to prove you are not working full-time and your monthly income must be no more than twice the federal minimum wage to qualify.

Graduated Payments

Sometimes a lender will allow graduated payments on a short-term basis during financial difficulties. This option is where the payments start low and go up on a predetermined basis. This works well for people who expect to have upward mobility in their careers


This option entails making a new payment plan with your lender once you are in default. The plan requires you to make twelve consecutive on-time payments at which time the loan is purchased by a new lender. You then have nine years in which to pay off the balance. The loan essentially becomes a new loan and your default status disappears. You are however responsible for all interest on both the old and new loans.

Income-Based Payments

In this scenario, your income is reviewed each year and your payments are adjusted accordingly. This plan is especially useful for those with low incomes or variable incomes.

Cancellation or Discharge

Your loan can be canceled or discharged, meaning you no longer are responsible for the balance under certain circumstances. These include if you become disabled, the school your loan is from is closed, take on specific teaching assignments, the loan application was fraudulent, or you die.


Student loan consolidation combines all your student loans into one large loan. The payments may be smaller initially, but escalate over time. Usually, the loan duration is extended, so you will most likely end up paying significantly more interest. In addition, to qualify for student loan consolidation you must be enrolled less than halftime and be current on your payments. If you are not current, you must have made three consecutive on time payments and have negotiated a payment plan. Finally,not all student loans are even eligible for consolidation, so check with your lender. Also, think twice about consolidating with your spouse. You then become jointly liable for the entire balance even upon death or divorce.

Going Forward

When seeking debt relief from student loans, first confirm what kind of loan you have and with whom. Review your statements to verify that all payments have been credited to your account. Then, contact your lender, explain your situation, and find out what your options are. You may find that student loan consolidation is just one alternative among several and another option might be more suitable for your situation.

Debt consolidation could make financial sense for your current situation however it would be wise to talk with a debt relief specialist and explore all possible debt relief options before making such a big decision. Check out the following link to get a free debt consultation from a debt relief specialist in your area. This is legitimately a free service that helps debt ridden consumers get back on the right financial track: Free Debt Advice (

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