Job Discussion Forums

[ClaudeRains]

If you are in default, the issue grows more complicated, however it is not at all a lost cause.

Know that if you are living and working overseas, you are beyond the reach of the DOE. If you approach them when they have no stick to use against you, such as wage garnishment, you are in a pretty strong negotiating position. If your loans are Federal Stafford loans, regardless whether they are subsidized or not, I suggest you do the following:

1. You have the right to ask for Satisfactory Repayment Arrangements. Here you set up reasonable and affordable voluntary payments for three consecutive months.

2. At the end of three months, you can then consolidate the loan. The federal government will essentially buy up the old loan and issue you a new one for the total amount, charging an interest rate which is the average of all the loans. When you package the old loans into a direct consolidation loan, you have the option to do so using an income contingent repayment plan. Do so. In addition, when you take this step, it's great for the collection agency, since they are settling the entire amount with you. They will be inclined to reduce the amount to make this happen. You should know they are authorized to waive all penalties and fees and varying fractions of the interest and principal, usually 20 to 30 percent.

3. At the end of another three months, you can transfer the loan into an Income Based Repayment plan. This is the one I discussed in the earlier post.