Loan Defaults at Highest Rate in Almost a Decade

Online, June 17, 2010 (Newswire.com) - As the economy worsens, more and more students are defaulting on their federally guaranteed student loans. The Department of Education reports that adjusted default rates for student loans are expected to reach at least 6.9% for the fiscal year 2007. That's an increase from from 4.6% two years earlier and would be the highest rate of default since 1998.

For some, there is good news.

Student loan holders who qualify due to a demonstrated financial need may apply for something called a loan "deferment." With a loan deferment, the government meets the loan payments each month that you are unable to pay, for a short period of time. Most types of federal loans also qualify for loan "forbearance," which means that the borrower can suspend payments temporarily but is still on the hook for the interest that continues to build while payments are on hold, which is then spread out over the life of the loan. IMPORTANT: Deferments and forbearances can each be used only for a maximum of three years for each loan.

Many major lenders have reported that they have granted more loan forbearances as graduates have struggled during the recession of the past two years. Recent College graduates have made up an ever-growing percentage of U.S. unemployed workers as the recession has deepened.

Some borrowers, who are experiencing a short-term financial problem, and who do not feel that they qualify for a deferred or suspended loan are turning to private lenders for personal and unsecured loans as a short-term fiscal solution. For those seeking unsecured loans, America One Unsecured offers a wide range of personal loans and unsecured loan products.

Those borrowers who are experiencing trouble repaying their federally backed loans can call their lender or visit www.federalstudentaid.ed.gov. They may also access the web site www.nslds.ed.gov or can contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).

Find out if you pre-qualify for an unsecured loan up to $250,000 by clicking here.