Student Loan Blues

Q: Twenty-five years ago, I completed three years [of undergraduate study] and I need to return to school to complete my degree. My student loans are in default, and the university will not release my transcripts unless I pay off the debt in full. Unfortunately, I’m not in a position to pay off the debt. And my credit is terrible, so applying for a loan is out of the question. Do you know of any grants, scholarships, or programs designed to help someone in my position?
—J.M., Via the Internet

A: When you default on a student loan, the maturity date is accelerated—making the payment due in full. However, there are some options for repayment. According to Federal Student Aid (www.ed.gov/offices/OSFAP/DCS/ index.html), in order to restore your eligibility, you can repay the loan in full, make six agreed-upon payments over a six-month period, or consolidate your loan through a federal consolidation loan program. Or, you can rehabilitate your loan, which requires 12 consecutive, affordable monthly payments. The remaining loan will be in repayment for nine years, making you eligible for additional student financial aid.

For information on grants, contact the financial aid office of the school you plan to attend. For scholarship information, read “How to Find Up to $100,000 in Scholarship Aid” in our February 2004 issue.

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