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People often find that they need to negotiate with their education lenders to get a better interest rate, defer payments on loans, or deal with other problems which may arise when handling student loans. Most lenders are very amenable to such discussions, but there are a few things to keep in mind which can make negotiations more successful and enjoyable for all parties involved.
One thing to be aware of is that because you cannot go bankrupt on student loans, most lenders are willing to be very patient. They are well aware that they will get the money eventually, and they are perfectly willing to charge additional interest if repayment takes longer than expected. For this reason, an education lender can afford to be much more flexible about repayment options than other types of lenders. However, a lender will not hesitate to garnish your wages or take other action if you fail to communicate, so make sure that you keep the lines of communication with your lender open.
The most important thing you can do when negotiating with a education lender is to establish a positive relationship with that lender from the start. Make sure to keep your address current, and pay your loans on time. If for some reason you cannot make a payment, call the lender and discuss the situation, rather than just not sending the payment. Many lenders are willing to excuse payments periodically for hardship, sometimes not even requiring paperwork, and others are willing to take partial payment in a month when you are having a hard time.
In addition to establishing a positive relationship, it can help to have a specific contact at your lender's offices. Note the name and extension of the person you talk to, so that you can call and ask for that person in the future. While anyone can handle your account, it helps to talk to someone who knows you and knows your history, as it can make negotiations go much more smoothly.
If you need to negotiate with your education lender to reduce or temporarily suspend payments, you will need to ask for a hardship deferment. Most lenders have a form for hardship deferments, often available on their websites, but it can help to call to discuss a hardship deferment so that a note will be made on your account before you send in the form. Be prepared to be asked about your income level and expenses when you call to discuss a hardship deferment, and if there are special circumstances, mention them in the phone call so that they are recorded in your account record.
You may also want to talk to your education lender about repayment plans. When your student loans go into repayment, most lenders set up by default a plan in which you pay the same amount every month. However, they often have other plans available, such a flex plan where you start out with small payments right after graduation, and your payments increase over the life of the loan, assuming that you will be making more money, so you can bear the added cost. Most education lenders also do not penalize for early repayment, which means that if you pay ahead in a good month, your total due the next month or months will be reduced accordingly.
If you are unhappy with your interest rate, you may be able to negotiate a better rate simply by calling and asking. Some lenders offer lower interest rates for customers who consolidate their loans, which is an option to consider if you are dissatisfied with your interest rate. Consolidation can also lock in a low interest rate, which can be very useful if you think that interest rates are going to rise.
If you find that your relationship with your education lender sours despite your best efforts, you may want to consider consolidating your loans with another lender. Government agencies set up specifically to handle student loans are often a good choice for consolidation. You should be careful about private, for-profit companies, as their consolidation terms may have hidden caveats which could become problems in the future.
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