Student Loan Deferments Rise

Online, September 15, 2010 (Newswire.com) - The adjusted default rate for federally guaranteed student loans is expected to reach the highest rate since 1998, according to new reports from the U.S. Department of Education. According to new data received from banks, the default rate could reach as high as 6.9%. The increase represents a rise of over two percent in only two years. As the economy and job market have worsened, new college graduates have borne a huge part of the impact - each year, more and more students fall behind or default on student loan payments.

Some borrowers are shoring up their finances using short-term loans and unsecured personal loans in anticipation of better economic times ahead. Many are opting to defer or temporarily suspend loan payments for a period of time. Those who qualify due to financial need may apply for a loan "deferment," in which case the government will pay the interest payments during the period of time the student cannot afford to make payments. Most types of federal loans also have "forbearance" programs, where 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. It is important to note however, that student loan deferments and forbearances can each be used only for a maximum of three years per loan.

Major lenders, such as Wells Fargo & Co., Sallie Mae and the nonprofit Vermont Student Assistance Corp., have said they are granting more as graduates have struggled during the recession of the past two years.

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).

America One Unsecured offers a wide range of loan products, including unsecured personal loans, small business loans and payday loans. Click here to learn more.