Loan Repayment Options For Unemployed Graduates

Online, January 3, 2011 (Newswire.com) - Student loan borrowers who are experiencing difficulty in repaying their federally backed student loans should call their lender or visit the Federal Student Aid Gateway website at www.federalstudentaid.ed.gov to request that their payments be put on hold until they are able to resume making payments. Most types of federal loans also qualify for "forbearance" -- meaning the borrower can suspend their loan payments temporarily but remains responsible for the loan interest that builds while payments are suspended. The new loan balance is then recalculated to spread the interest out over the life of the loan. Certain need-based student loans may also qualify for a loan "deferment," in which case the government pays the borrower's interest payments for the period of time they are unable to. Deferments and forbearances can each be used only for a maximum of three years for each loan.

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It is a fact that more and more students are defaulting on their federally guaranteed student loans. According to new numbers from the U.S. Department of Education, default rates for federally guaranteed student loans are expected to reach 6.9% for fiscal year 2007. That's up from 4.6% two years earlier and would be the highest rate since 1998.

Some major lenders, including Wells Fargo and Sallie Mae, have reported granting a larger number of loan forbearances as graduates have struggled during the recession of the past two years.

If you are experiencing trouble repaying your federally backed loans, you can call your lender.