|By Carol Lawrence, Ventura County Star, Calif.|
The large payments and high and variable interest rates, compounded by a sluggish job market, are forcing many graduates to seek relief from lenders but are finding them vague, aggressive and anything but cooperative.
"There was no way I was going to pay off
After that, Dehesa, an attorney with the
Federal and private student debt is approaching
Private loans account for only a slice — 15 percent — of the overall student loan market. according to the consumer loan oversight agency, the
In July, reminiscent of the federal government's steering of home mortgage lenders into doing modifications and workouts during the foreclosure crisis, the Fed and other regulators began nudging private lenders to do "prudent workout and modification programs" such as extensions, deferrals, renewals and rewrites for struggling borrowers, and told the lenders they wouldn't criticize them if it affected their credit.
Clients with private and federal loans facing bankruptcy are giving lots of work to bankruptcy and debt settlement firm, the
"Each private lender is different in what they will work out with borrowers," Sutter said, because every borrower differs in details such as overall income, size of family and medical issues.
A common tool for getting out from debt — bankruptcy — is not available to student loan borrowers, the attorneys said. However, under extreme hardship cases, such as if a borrower becomes disabled and unlikely to ever work again but has attempted to repay the debt, the loan can be discharged through bankruptcy or possibly forgiven by a lender.
A "huge tool" for borrowers and their attorneys is the statute of limitations for private loans, Sutter said.
"Private loans are like credit card debt," he said. "If they don't bring a lawsuit within four years, and if you stop paying, and they put the loan in default, and they stop trying to collect from you, and in four years they haven't reached out to you to collect from you, they're done."
Student loans now also burden parents, as most private lenders now require co-signers on student loans, according to the
Rounds and Sutter say three-quarters of their bankruptcy clients are parents bogged down with their children's loans in addition to their own debt. It's "a consistent problem," Sutter said.
"Their ability to buy a home or make financial decisions are always going to be impacted by the student loan they co-signed," Sutter said.
The co-sign requirement stopped
"That would've been
Coleman didn't want her parents to co-sign, she said. Instead she asked
After four refusals,
"They won't let you refinance, they won't work with you at all; they won't let you do anything," Coleman said. "It's really frustrating."
In light of the tough economic and job situation for graduates,
So are other lenders.
Rounds and Sutter say they've found negotiating lump sum settlements with private lenders rather than small payments over time to be more successful when there are multiple debts. Most of their clients have debt in addition to student loans.
Another solution can be a fixed payment at a variable interest rate, the attorneys said. Also, lowering payments for other debt, such as credit cards, helps clients pay off student loans
Dehesa said she paid off a large chunk of her private loan using credit cards that offered zero percent. That worked only because she budgeted what she could pay off, Dehesa said, and made all the monthly payments.
"That's a dangerous game to play," she said, and doesn't hide a student loan should the borrower try to declare bankruptcy. Borrowers will likely still be responsible for the full student loan, she said.
Student loan debt is "a huge problem for our generation," Sutter said. "There's no buying a house if you've got
Student debt tips
*Attend a college and graduate school that's affordable
*Attend a less expensive community college and transfer to a four-year college
*Take classes online when less expensive
*Work while in school to pay off student loan debt before graduation
*Take credit counseling classes
*Use loan money only for tuition
*Don't miss payments
*Negotiate loan interest rates and terms; shop around
*Understand loan repayment terms
*Pay at least the minimum on loans
*Meet with a financial adviser to learn how to budget; set financial goals
*Seek help from debt settlement lawyers before trouble starts
* Parents: avoid co-signing on student loans
*Pay off the most expensive loan first
(c)2013 Ventura County Star (Camarillo, Calif.)
Visit Ventura County Star (Camarillo, Calif.) at www.vcstar.com
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|Source:||McClatchy-Tribune Information Services|