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Debt relief can help avoid student loan default

For many Washington residents, college graduation is an event that is marked by both pride and anxiety. A shifting economy and uncertain job market has many new graduates concerned about how they will put their degree to work. Others are worried about covering their student loan debt, and unsure when they will find a job that pays enough to cover monthly living expenses and debt service. It is not uncommon for recent graduates to seek out debt relief options as they struggle to avoid defaulting on their student loans.

The consequences of defaulting are significant. Aside from the stress of having to personally deal with bill collectors, many people find that debt collection companies will contact their parents, friends or even their employers in an effort to get payments back on track. Credit scores also take a big hit when a loan goes into default, which can make it harder to find new lines of credit to purchase a house or vehicle. In some cases, the government can even garnish the paycheck of a person who has defaulted on a student loan.

There are ways to address student loan debt, but it is necessary to take a proactive approach. Consumers should ask about income-driven repayment options, which allow borrowers to make payments based on their current level of income. Loan deferment or forbearance is another option , but interest could continue to accrue in certain circumstances. Finally, loan forgiveness programs are another option for people who are willing to work in public service roles such as teaching or nursing.

For those in Washington who are concerned about the risk of defaulting on their student loan, it may be time to take a more holistic view on the issue of debt relief. In many cases, high levels of consumer debt are the root cause of a financial crunch. Eliminating those debts through personal bankruptcy can provide the breathing room needed to get student loan payments back on track.

Source: USA TODAY, "How to avoid becoming one of the million Americans in student loan default", April 10, 2017

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