If you received a federal student loan (such as a Stafford loan, PLUS, or HEAL loan) from a financial institution, they would probably offer some sort of income-based repayment plan.

Because these loans are not from the government, there may not be any provisions in the agreements for loan forgiveness after 25 years. The payments may not be as low as they would be from a direct federal student loan.

Student Consolidation Loans and Refinancing

• Grouping several loans together
• Extending the repayment period

Keep in mind that because you are extending your repayment period, you will probably end up paying more in interest throughout repaying your loans. However, consolidation may also allow you to secure a lower interest rate on your student loans, so it may be worth investigating.

• The monthly payments on your loans are too high but your income is not low enough to qualify you for postponement or deferment
• There are low-interest rates around and you want to get a lower interest rate for your student loans
• You are currently in default on your student loans and you want to qualify for new loans or grants so you can continue your schooling
• Not all of your loans are through a direct loan program from the government and you want to get on an income-contingent repayment plan that your lender does not provide

There are several different lenders offering loan consolidation, including the federal government. Your student loan repayment options will vary depending upon the consolidation lender you select.

Keep in mind that, except for only a few types of loans, you will only be able to consolidate your student loans once.

As tuition has increased and student loans have gotten bigger, it has become more popular to consolidate loans. Because of this, many lenders have aggressively marketed loan consolidation. You should compare the different online payday RI loan consolidation programs available to you to find the best deal.

What Happens After a Student Loan Default?

When a student loan borrower fails to make a payment, they become “delinquent” the first day they miss the payment.

If you remain delinquent for nine months, the student loan enters default. You may be held liable for collection fees and the commission charged by any debt collection agency involved. The U.S. Department of Education has several collection options available to them, including:

• Seizing your tax refunds (see below)
• Garnishing your wages
• Seizing federal benefits such as Social Security retirement and disability benefits

Seizing Tax Refunds for Student Loan Debt

The Department of Education may seize your tax refund to apply it toward defaulted student debt. Though borrowers may appeal, the valid defenses are limited.

Alternatively, the Department of Education may seek to garnish your wages. They can garnish up to 15% of your disposable income (this law was temporarily changed due to the COVID-19 pandemic). The defenses to garnishment are very similar to the defenses against the seizure of a tax refund.

Find Out More About Student Loan Relief

While there are various options to help with paying back student loans, the best way to figure out how to manage student loans is to speak with a local bankruptcy attorney who can advise you of your options based on your specific situation.

You must pay off your student loans within 25 years (not counting periods of deferment or forbearance) on an income-based student loan repayment plan. If you do not, the federal government will forgive the remainder of your loans, but you will have to pay taxes to the IRS on the amount of your loans that are forgiven.