Who would have thought…?
Did you ever imagine that our children would be in so much debt, at such a young age, and all for trying to get an education? I’m not going to get on some soap box and talk about the state of debt in our country, it is what it is. Still, it is sad to see fresh college graduates already walking around burdened with debt from their student loans.
Unemployment rates going up certainly do not help the situation. It is getting harder for our kids to get a stable job, which makes it harder for them to pay back their loans. As a result, we have to find the best debt settlement plans for them in order to ease their burden.
It isn’t Easy, but it can be Done
Settlements for student loans are not very common. This could be attributed to the high defaulter rates for student loan borrowers. However, it isn’t impossible to get a settlement, whether with a private or a public lender.
There are a few things you will have to consider as you work towards a settlement with lenders. First, do you want to handle it yourself, or with a debt counselor. My advice is unless you have a family member you trust who can give you solid advice on how to conduct these negotiations, you should hire the services of a debt counselor. You see, beyond getting you out of this rut, they will give you some great skills on how to handle other kinds of debt you may have presently or in the future.
Exhaust your Options
Next, make sure you have explored all the programs set to facilitate student loan repayment. There are reductions, postponements, deferments and extensions that the government, in conjunction with these lenders, provides to help people repay these loans. In order to be legible for student loan settlement, you need to have exhausted all these options.
You need to present a credible case for the lender’s consideration. Explain why you are having trouble paying up and show them what your plan for repayment is based on your current situation. You will have to show them everything about your current financial status in order for them to assess your ability to pay back their money. Your credit counselor/trusted relative will come in handy here to help you develop a feasible repayment plan.
Get your Lump Sum
Debt settlement generally implies that you will have a lump sum amount that you are willing to offer. This amount is less than you owe but should be substantial enough to facilitate dialogue between you and your lenders. So you need to find this money before you even think about negotiations.
Student loans tend to only accept three offers with regard to the lump sum:
- The principal balance plus interest accrued less collection costs
- The principal amount plus half the interest balance
- 90% of the current amount and interest
Try to have your lump sum match these requirements since other settlements may prove challenging to negotiate. All the best!