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Student loans are a debt you have to repay according to the Federal Trade Commission (FTC). You still need to repay the loan even if you did not complete your college degree. But, you will find exceptions to the rule. You can start by meeting with your lender. Talk to the loan officer about your debt and ask her if she can work with you.

Types of Student Loan Relief

Private lenders do not have loan forgiveness programs, but they can work with you to repay your loan. Two ways to help you repay your student loan is to Consolidate and Refinance or Forbearance. The FTC states loan consolidation is not for everyone, but it can offer relief.

  • Consolidation and Refinancing

When you combine all your loans, you can refinance at a much lower rate and reduce your monthly payment. The bank will review your credit history before offering you a payment plan. They look at your income, savings, and your college degree. You need to meet the requirements the bank offers to get the financing. If you do not qualify, you can have someone cosign the loan for you.

Private student loan consolidation requires you to apply for the loan. It is not an automatic thing. It does not work the same way as federal student loan consolidation. Before getting such a loan, try to improve your credit score. You have a better chance of getting a lower interest rate.

  • Requirements for loan consolidation

Banks have different rules. The rules include having a bachelor’s or graduate degree, and a credit score of 650 or more. There is also an income standard. It can be as little as $24k annual or more.

  • Student Loan Forbearance (SLF)

Under the SLF program, you can have your monthly payment reduced for up to 12 months. Under certain conditions, you may not have to make any payments at all. The loan will still gain interest during that period. Your private lender does not have to offer you this choice, and the time is not long-term. The decision is up to them and not you.

Declaring Bankruptcy

Making such a decision is not a simple one. Bankruptcy as a way of clearing up your debt should be your last resort according to the FTC. Speak with your lender first or seek credit counseling. If you go this route, you will pay a hefty price. The two choices you have are Chapter 7 and Chapter 13.

  • Chapter 7

Under this rule, you sell your assets that are not exempt. Items falling under the exempt property include cars, work tools, and household furnishings. A court-appointed official may sell your goods. If not, the creditors may get ownership of them. The bankruptcy laws have changed the period in which you can get a discharge. The current term is eight years.

  • Chapter 13

The rule allows you to keep ownership of your property only if you have a steady income. Those assets include your house and your car. The court will arrange for you to use your income to pay off your debt. It takes place over a three-year period. Once you have completed all your payments, the court will discharge your debt.

Bankruptcy will get rid of outstanding medical bills, credit card debt, and foreclosures. Other obligations include garnishments, utility shut-offs, and any debt collection. Check with your state to see the list of exemptions.

Under the two rules, you will still have to pay child support, alimony, taxes, and certain student loans. Plus, if you have an unpaid mortgage, you may not keep the property unless you can pay off the loan. This rule applies to Chapter 13. Another hurdle you have to cross is getting credit counseling before filing for bankruptcy. You need to do it within six months of filing for bankruptcy.


Whatever choice you make to pay off your student loan will not be an easy one. The first resort is to speak to your lender. They will present you with the choices they have and work with you. It is better to work on paying off your loans instead of filing for bankruptcy. You can also speak to a credit counselor to get the help you need. Your aim is to keep a good credit history.