managing student loans

A Single Second Chance

If you default on a federal student loan, the system offers a single chance for you to get out of default by enrolling in a reasonable and affordable repayment plan. You and your current loan holder work together to set up this plan. If the loan holder proposes a plan that costs more than you can afford, what can you do?

1. Accept the plan and take out a payday loan to cover the expense.
2. Document your living expenses by sending the loan provider your budget.
3. Threaten to take the loan holder to court.

"B" is correct. Once a repayment plan is approved, it's important to make your payments on time and in full. After you make nine on-time payments in a row, your loan will be taken out of default, the default will be taken off your credit record, and the default consequences mentioned earlier will be reversed.