Student Loan Default Avoidance

It's very easy for student-borrowers to overextend themselves and experience difficulties managing repayment obligations. There are many resources and tools that can help you make sensible borrowing decisions and avoid student loan default.

Before You Borrow

  • Make sure you really need the loan you're considering. Could you meet the expenses by working extra hours or from another source?
  • Think about the "big picture" effects of your borrowing. How much will you have to borrow in order to graduate? Your school's financial aid or admissions office is a great resource for determining how much debt is average for your course of study. It's also helpful to calculate what your monthly payment will be after you graduate so you know if it's manageable.
  • How much do you intend to earn once you enter the work force? Your student loan payments should be less than 15% of your salary. For example, a $40,000 salary provides about $2,803 per month (accounting for federal income tax). This means your monthly loan payments should not exceed about $420 (this can be higher for students living with parents or without other financial obligations).
  • Stay on top of your expenses! Know where you spend your money and be on the lookout for ways to save. For example:
    • Use public transportation rather than owning a car
    • Share a room with roommates instead of living alone (or move back in with your parents if the situation allows)
    • Eat at home rather than eating out
    • Find other money management tips to help you save
    Personal finance tools like can help with this.

Managing Existing Obligations

  • If you're having trouble meeting your student loan payments, contact your loan servicer. You may qualify for a deferment, forbearance, or repayment alternative that is more affordable. To find information on your federal loan servicer, log in to or request a copy of your credit report to locate all of you federal and private loan information.
  • Consolidation can help by extending your loan's repayment term beyond the standard ten years. While this will increase the total interest charges, the monthly payments will become more manageable.
  • Use credit cards wisely. Only use your card for expenses you can afford right now and pay it off entirely every month. Not only will this keep you out of debt, but it will help improve your credit too.

Apply for Student Loan Consolidation

Did you know that consolidating your private student loans could potentially lower your monthly payments as well as your interest rate? At, you can calculate your potential savings, compare lenders, and apply, all in one place! Get Started Now »

Managing Defaulted Student Loans

If you're already in default, consolidate your defaulted student loans into one lower payment. If you have any difficulties, here are a few other options: