Student Loan Debt – What to Do

Are Student Loans affecting your credit?

The value of a college degree has never been higher at least in financial terms. Over the past decade, the cost of a university education has risen three times faster than other school-related expenses. Most students finance at least some of that cost by taking out student loans, with the goal of having their investment pay off with higher earnings down the road.

↓Repaying student loans can be a significant hurdle, especially for those trying to become homeowners, or improve their credit scores.

It has been estimated that Americans now owe more than $1.53 trillion in student loan debt. That money is not only owed by young people fresh out of college, but also by borrowers who have been out of school for a decade or more. The standard repayment timetable for federal loans is 10 years, but it’s been estimated that it actually takes four-year degree holders an average of 19.7 years to pay off their loans. 


1. Current U.S. Student Loan Debt =  an est. $1.53 trillion

2.1 in 4 Americans have student loan debt: an est. 44.7 million people

3. Average student loan debt amount = $37,172

4. Average student loan payment = $393/month 

Student loan debt has actually surpassed credit card debt.

The more debt you have, the more important it is to be strategic about paying it off. Student loans affect your credit in much the same way other loans do. Pay as agreed and it’s good for your credit; pay late, and it could hurt it. Student loans, though, may give you extra time to pay before you are reported late.

Student loans are installment loans, you pay a specified amount for a certain time period. The lender reports this to credit bureaus, and you begin to establish a track record. Paying your student loans late, affects your credit. How long before the late payment is reported, depends on the type of loan you have:

  • Federal student loans: Servicers wait at least 90 days to report late payments.
  • Private student loans: Lenders can report them after 30 days.

Also, lenders can charge late fees as soon as you miss a payment.

If your lender does report your late payment, also known as a delinquency, it will stay on your credit report for seven years.The more overdue your payment, the worse the damage to your credit. For instance, your federal student loan will go into default, if you don’t make a payment for 270 days. That will hurt your credit even more than a 30- or 90-day delinquency.

If you cannot pay your student loans:

In these situations, ask your lender about lowering or pausing your monthly student loan payments. You might be able to:

  • Sign up for an income-driven repayment plan if you have federal loans.
  • Apply for a modified payment plan if you have private loans and your lender offers this option.
  • Enroll in deferment or forbearance to temporarily pause your monthly payments. (But remember unless your still in school you can only put your loans off for so long until you eventually have to pay them)

Changing the terms of your loan does not hurt your credit. As long as you handle payments as agreed even if that means paying $0 per month your credit score shouldn’t suffer.

In need of student loan assistance? Need an affordable payment plan?

Credit Corrector Solutions Can Help

Contact us today (877) 788-6655

or fill out our contact form on this site!

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