How To Reduce Student Loan Debt and Get Out of Default

Reduce Student Loan Debt. Reducing student loan debt can seem intimidating to borrowers and even impossible to borrowers who are in default. However there are tons of ways to chip away at student loans! The main thing that can help is to have a solid plan in place and to stick to the plan as best as possible.

Reduce Student Loan Debt What Going Into Default Means

Going into default can occur if borrowers don’t make loan payments for a certain amount of time (for private loans sometimes it’s up to 120 days and sometimes it’s up to 270 days for federal loans). Certain states have laws that allow some borrowers to not have to pay back their loans if they’ve been in default for 3 to 4 years or more. However this is usually a risky strategy to embark on. Borrowers who are trying to have their loans waived using this strategy can be sued by creditors during the 3 to 4 years before their debt is erased. If a borrower ends up getting sued during this time, then they’ll likely have attorney fees and they may not win their case. This could result in them still having to pay their loan and having to pay attorney fess as well.

Even if a borrower makes it through the statue of limitations (usually 3 to 4 years) without being sued, they still run the risk of creditors trying to sue them after. This could result in the borrower having to spend money on attorney fees. Borrowers who do this can also harm their credit scores, which can make it difficult to get a car loan or mortgage. Because of all the risks involved it’s usually better to create a solid plan and implement effective debt management strategies.

Student Loan Forgiveness Stick To The Plan

Outlining a plan is usually the best way to accomplish any goal. The first step to getting a handle on debt usually involves gathering loan documents and invoices. Next its best to look at how much money is owed on each loan. Private loans in default are usually sold to collection agencies. Working with collection agencies to outline a payment plan and negotiate how much of the loan will be paid back can be difficult. Keeping records of all communications with the collection agency is always the best way to go. That way there’s documentation that can be referenced if any disagreements occur in the future.

Federal student loan debt has no statute of limitations. This means federal loans won’t go away. If enough time goes on and no payments are made, then the government can withhold tax refunds and garnish wages. Some federal loans allow up 270 days before the loan goes into default. Borrowers who are within this time frame may be able to ask for a deferment, which could allow their loan payments to go on ‘pause’ temporarily. Forbearance may be another option as well. Borrowers who are over this time frame may be able to set up loan rehabilitation. This usually involves reducing monthly loan payments by extending the total number of the months the loan should be paid back within. The other option may be to consolidate a loan into a new one with different requirements.

Hope Credit How We Can Help

If you’re looking to reduce student loan debt or have questions about different options you may qualify for we would be happy to talk with you. Feel free to contact us by clicking here.


Cowles. Charlotte. (2018, September 20). I Defaulted on My Student Loans. Now What? Retrieved from