How to handle student loan debt after college


It's no secret that the college graduates of today face numerous challenges.

With the global economy still struggling, the job market for recent graduates is less than ideal. Competition for jobs is also heated, as high rates of unemployment have created a job market in which out-of-work yet experienced professionals are routinely competing over entry-level jobs with recent graduates, many of whom have little or no experience in their chosen fields.

But the difficult job market is only part of the troubles recent graduates must face. Mounting debt is a major issue for many college grads. In Canada, for example, the average debt for a university graduate more than doubled between 1990 and 2000. By the 2009, Canadian students' collective debt from the Canada Student Loan Program exceeded $13 billion for the first time in history.

Across the border in the United States, the Class of 2011 earned the distinction of being the most indebted graduating class in the country's history. According to estimates from student-aid Web sites and, the average 2011 graduate was $22,900 in debt upon graduation.

In addition to finding work in a job market that's overcrowded with applicants, recent graduates must also find a way to handle their now historic amount of debt. Those facing loan repayment while struggling to find a job should consider the following tips.

* Don't delay requests for help. Procrastination isn't a good approach to dealing with debt, whether that debt is from student loans, credit cards or personal loans. Recent graduates who cannot find work or who were laid off should contact their lenders right away and inquire about lowering or postponing monthly payments.

It's never good to miss a payment, which will negatively impact an individual's credit rating and is almost certain to draw a financial penalty. If trouble is on the horizon, consult the lender as early as possible. The lender will likely grant a deferment or forbearance, neither of which will tarnish an individual's credit.

* Don't ignore it. Simply ignoring a student loan and not repaying it is not a good approach. The loan will still be there, and even bankruptcy court is not likely to discharge a student loan. In other words, individuals are going to have to repay their student loans, so ignoring them is not going to work. If an individual stops repaying his or her loan without being granted a deferment or forbearance, eventually wages might be garnished and private lenders might even sue their borrowers.

* Don't panic. The current economy could seem daunting to recent graduates. Some may wonder if they will ever find work in their fields or if they will ever be able to repay their loans. But panicking won't help. Lenders will be willing to work with borrowers who are honest and straightforward. Avoiding lenders and missing payments will only make the situation worse.



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