Almost everyone in the finance industry agrees that the next financial explosion in the country will be student loans.
The federal government saw the problem coming and has moved to offer more flexible repayment terms and borrower protection for federally-backed student loans.
However, a large segment of student loans are held by private lenders. These private lenders, mostly big banks, and financial institutions have not shown the kind of flexibility that the federal government has shown in recent years.
Many of these private lenders now realize that being inflexible could lead to a financial tsunami, not unlike what the country experienced in 2008. However, unlike 2008, the federal government will not be proposing bailouts for banks in this matter.
Credit Wells Fargo with being one of the first banks to announce lower interest rates for eligible borrowers as of November, 2014. The bank will also offer extended payment periods starting in February, 2015. Wells Fargo has indicated that borrowers facing hardship do not have to be delinquent on their loans to qualify.
Another significant financial services entity to look at is Discover Financial Services. Discover holds over $8 billion in student loans, and they are beginning to give consideration to restructuring its student loan program. For students facing unusual hardships; they could potentially see their interest rates lowered, and in some cases forgiven.
Many more financial institutions are in discussions about becoming more flexible in their lending and repayment plans.
So if you are a graduating student or have already graduated and are carrying a heavy financial burden due to student financial loans from private lenders, you should consider contacting that lender about modifying your loan repayment terms.
Should your bank prove to be inflexible to your request for modification of your loan, you may wish to contact the Consumer Financial Protection Bureau (CFPB). The CFPB is a relatively new independent federal agency that oversees private student loans. To be sure, they will assist if you are having difficulties getting accurate information on alternative repayment plans and loan modification options.
In addition, the CFPB provides a downloadable template letter you can mail to your lender or student loan servicer to help you get an answer regarding your repayment options. The CFPB website allows you to submit a complaint online, or you can call the CFPB at (855) 411-2372.
Your financial future in a world after graduating from college, largely depends on having a decent credit record. The ability to buy a car or home can be severally diminished if you fall behind on your student loan payments or worst yet, default on your student loans.
Don’t let your student loan become an albatross around your ‘financial’ neck.