Student Loan Late Payment Forgiveness

VD September 09 2021

If we talk about the United States alone, the American student community's estimated amount of student loans payable is mind-boggling. Till the financial year of 2021, the total student debt has reached a massive amount of 1.7 trillion USD. 

You might be surprised to know, but to this very day, every single operation of NASA was included in a budget of 650 billion USD.

And yearly, the US student debt pool is getting bigger and bigger, especially during the pandemic, resulting in prolonged lockdown and decreasing work opportunities.

Don’t take it hard on yourself if you weren’t able to pay the following student loan payment. Banks and corporates are quite generous these days if we talk about student loan late payment forgiveness. 

But it is a fact: A late payment will eventually affect your overall credit score if countermeasures aren’t taken fast. The missed or late payment is mostly included in the final credit report, which affects the overall credit average. 

But what will exactly happen if a student loan payment is delayed/missed from my side?

First, relax. If you have used the right approach to receive student loan late payment forgiveness, your overall credit score will not be affected in any way. But you need to take the right steps fast before the final credit report is compiled.

You still have a 30-day period after the due date, during which you can submit the payment to the lender. Within these 30 days, the late payment will be included in your credit report. Sometimes, the lender may ask you to pay extra charges as a part of the fine for the late payment.

The fine is always negotiable and it depends on your skills to deal with the lender. If because for any reason, you aren’t able to make the payment even within this 30-day deadline, the lender gets the right to report the late payment to the three primary credit bureaus.

In the case of a federally approved student loan, this 30-day delay payment is increased up to a 90-day duration. That’s why you must know what kind of loan are you getting in the first place for your studies.

Best way to prevent a late student loan payment

If you don’t like the idea of sending goodwill letters to get student loan late payment forgiveness, the best way to prevent a late payment is to plan about it before the due date. Students often use certain tricks to deal with this issue.

First, you can always go for the automatic loan payment deduction. During this process, every time the loan payment is due, the amount will be automatically deducted from your mentioned authorized bank account. But make sure that your account has enough funds to support the payment deduction before the deadline.

Second, some debtors also prefer going with income-based repayment plans. In other words, a certain portion of the amount is automatically subtracted from their weekly or monthly salary to compensate for the upcoming student loan payment. As a debtor, you can select the best duration plan for yourself as well.

And last, to get a forbearance. Let’s say a person is going through a major financial or health crisis. In this condition, the debtor can get forbearance from the respective authority. This allows the debtor to postpone his/her all upcoming loan payments for a certain amount of time.

What about goodwill letters? Will they help preventing the negative credit?

Probably one of the most heard ideas of all time to get student loan late payment forgiveness from the respective lender or bureaus. Of course, it can help you achieve the favor of the respective authority only if you know what you’re writing in the letter.

You can even write a goodwill letter to the respective authority without any late payment due. This will be a great way of developing a friendly and cooperative relationship between you as the debtor and the respective organization as the creditor.

In case of late payment, there are certain conditions and situations under which the letter will be acceptable:

  • If the debtor has lost his/her job recently.
  • If one of the loved ones of the debtor is facing a medical issue.
  • If the debtor himself is facing medical issues.
  • If the debtor is undergoing or has gone through his/her divorce settlements recently.

You can even send a goodwill letter if you have mistakenly forgotten the due date or any other human error-based reason. After all, we all are humans!

What should I include in the goodwill letter?

Tell the truth in writing a goodwill letter to convince the authority or lender to grant you student loan late payment forgiveness so it doesn’t affect your credit score. No matter the reason, tell the truth, and you will be fine in 9 out of 10 cases.

Do you know what one thing that corporates and lenders absolutely can’t stand is making unrealistic stories and reasons to get a favor from them? You may think that you can save your credit score this way, but in reality, you will be losing your credibility in the eyes of the lender and authorities.

Instead of jumping directly to the main issue, always start your letter with a warm yet professional greeting. For the body of the letter, prefer using concise and professional words that can explain your reason in the best possible way.

But don’t include unrealistic or unacceptable reasons within the body of the letter, be genuine. As humans, we have a remarkable ability to catch made-up scenarios and reasons. 

In the end, explain why maintaining your credit score is so important for your financial stability. Don’t forget to thank the lender/authority for their time in the end.

Is sending a goodwill letter a 100% effective plan?

Not 100%, but you can say that there are around 60% chances of the letter removing the record's delayed payments. This is because the final decision of issuing the student loan late payment forgiveness depends upon the respective lender or the corporate professional in charge of the whole operation.

A warm and professional goodwill letter will have a favorable effect on your request. But there’s no way to know about the lender’s response most of the times a goodwill letter is dispatched.

Sometimes, the lender removes the late or missing payment report from the respective bureaus without updating the debtor about the latest actions. 

As a result, you may still see the missing payment report as a part of your credit report. But as time passes, the report will automatically be resolved to revive your credit score back to last.

While sometimes, the lender organization gets back to you with a letter regarding your request’s current status. The lender may ask for additional proof before removing the respective report from the bureaus. But with the right approach and providing all the necessary proofs, you will get your credit score back on track in no time.