Ask YOUNG MONEY: Can I ever get another student loan if I defaulted on past loans?
Dear YOUNG MONEY,
My student loan has been in default for many years. I am currently in a repayment program and have been making monthly payments for over two years. Can I return to school? Can I get my transcript? Can I ever get another student loan?
The loan rehabilitation program administrator said I was now eligible to have my loan purchased by a private lending institution. This did not work: A lending institution did not purchase my loan.
What are my options without creating more debt?
Sylvia
Dear Sylvia,
The school should release your transcripts as long as all the charges you owe them are paid.
The response from the program administrator is right on. If you can't find a private lender, check the Federal Direct Consolidation Loan program. The Direct Consolidation program might be your best bet to take over your existing loans - help you get them back on track and set up a repayment schedule that you can easily manage. If the Federal Direct program will take these loans over for you, at least you can get in good standing with the school and get your credit cleaned up.
To keep from having to take on any more education debt, you might want to look at a school that doesn't cost too much - maybe a community college. Community colleges offer wonderful programs and are well worth looking into, especially if you are trying to pay tuition costs out of pocket. Your other option is to find out if the school you want to go to offers a tuition payment plan; basically, your tuition payments will be broken down into monthly or quarterly payments, which might be manageable for you.
Let's go back to your existing loans one more time. If your existing education loans are in good standing, you can apply for and probably receive some additional student aid. The best advice we can give you is to talk to the college financial aid office to be sure you have done and are doing everything you should to get your loans back on track and to get in good standing with the school.
There is one last resort, and that is private education loans. You really need to be careful about any private loan programs you look at. Private loans are generally credit based with higher, variable interest rates. If you do not have the appropriate credit, you will have to get a credit-worthy co-signer. Buyer Beware! Payments on these loans are generally higher. Know the terms of the agreement, and shop around!
Sandy Baker-Evans
Student Lending Works
