Different Types of Student Loan Debt

Based on the kind of student loan you have, your plan for debt relief might be different. There are two basic types of student loans: privately-issued and government-backed. Although Pell Grants technically are considered a third type of student aid, they don’t need to be repaid under normal circumstances and, therefore, aren’t typically grouped with these other student loans.

Government-Backed Loans

There are three types of government-backed student loans: Stafford, Perkins, and Direct Loans. These loans are similar to private loans in that they gather interest and adhere to a strict repayment timetable. Unlike private loans, though, they often have borrowing limits for each semester. The benefit of these loans is that they usually carry lower interest rates that may not kick in until well after graduation. One disadvantage is that government-backed student loans can’t be discharged in bankruptcy or settled through negotiation.

To receive debt relief from government-backed student loans, you have to enroll in a restructuring program through the federal government. There are many options here depending on your situation, including the Federal Direct Consolidation Loan program, the Public Service Loan Forgiveness program, or an income-based repayment program. We can point you in the right direction for help with your federal loan.

Private Loans

Private student loan debt is usually easier to restructure, as these loans are through independent lenders. With our expertise in negotiating with creditors, Liberty Debt Relief can look over your finances with you and determine how much of this unsecured debt you can afford to pay off. Then, we’ll work with your lenders to potentially lower how much you owe.