Seek Credit Counseling to Erase, Reduce, or Manage Student Loan Debt

– and avoid the pitfalls of Student loans. Credit Counseling agencies such as The National Foundation for Credit Counseling (NFCC) and American Consumer Credit Counseling (ACCC) can offer students advice on how to manage loans.

“The NFCC has developed a best-in-class program that helps our members uphold the highest standards when serving the needs of Americans with student loan debt,” said Susan C. Keating, president and CEO of the NFCC, in a release. “Our certified counselors are uniquely qualified to address the full range of financial challenges consumers face every day, now including student loan obligations.”

Credit counseling agencies worry that the next major financial crisis will be partly due to the lack of ability by graduates to pay back the student loan debt, which is now growing at a faster rate that credit card debt. The Consumer Financial Protection Bureau (CFPB) estimates that Student Loans now total more than $1 trillion – with millions of students borrowing loans that are as much as the cost of a home. Student loans are impacting their quality of life, including affecting their ability to buy cars or homes. And, many graduates are failing to find jobs that provide them the financial stability to pay back the loans.

“Among the 43 million total student borrowers, the NFCC says 7.3 million are at least 90 days delinquent on their loans, 5.0 million are in default, and millions more are in negatively-amortizing income-driven repayment plans,” says Consumer Affairs.

Unfortunately, as students struggle to make payments, they commonly turn to postponing loans in the form of deferment or forbearance. However, American Consumer Credit Counseling says “better options may be available. Deferment and Forbearance are temporary fixes (1-3 years) and do not address underlying financial issues which may require budget counseling.”

What graduates fail to realize is postponing student loans can only prolong the issue of repayment because it increases the amount you owe in interest payments. Credit counseling agencies only recommend taking advantage of deferment or forbearance programs under dire circumstances: such as the possibility of delinquency or defaulting on your loan. Defaulting on student loans, can damage your credit or increase your loan balance. And, the IRS may use your income tax refund, paycheck, or Social Security benefits to pay for the loans. Lenders can also sue.

Those who are struggling to repay student loans should consider turning to a credit counseling agency for help. According to The Federal Trade Commission , “credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops” to develop a customized plan that helps you deal with the problem.

Credit counseling agencies can specifically help students by educating them on repayment, forbearance, and loan modification options such as cancellation, rehabilitation, or consolidation to eliminate or reduce monthly payments. If you have already defaulted on your student loans, credit counseling agencies might also be able to help you get temporary or permanent relief from making payments.

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