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Student Loan Personal Finances

Bad news first. Only loans you received under the William D. Ford Federal Direct Loan Program are eligible for the Public Service Loan Forgiveness (PSLF) Program. Loans you received under the Federal Family Education Loan Program, the Federal Perkins Loan Program, or any other student loan program, including private student loans, are not eligible for PSLF.

Now for the good news. There are several options for refinancing private education loans. Visit's website about private student loan consolidation for a list of banks and institutions that offer you ways to consolidate and refinance loans. Note: The interest rates on private student loans are based on your credit score. That means you might be able to get a lower interest rate through a private consolidation loan if your credit score has improved significantly since you first obtained the loan, according to FinAid. Or, you might not qualify for such a loan, or the interest rate might be higher than what you are already paying.

And now for more bad news: Student loans are not automatically discharged with bankruptcy, according to Alltuition. You have to prove that repaying the loan would be a severe hardship for you, by submitting appropriate forms and documents to the court.

But that's not easily done, says Gary Carpenter, executive director of the National College Advocacy Group. Most private student loans are not discharged in bankruptcy. It will remain a debt that you still owe the lender. And, if you default on your student loan, Carpenter says "the private lender will start collection action to collect the debt."

And, yes, if you default on your student loan, it will hurt your credit rating. ... More

Student Loan Assistance Counsel

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