The jobless economy is taking a toll on a growing number of college grads who are behind on their student loans. Nearly 7 percent of student loans for fiscal year 2007 are expected to default, involving more than 231,000 borrowers, according to the U.S.
Department of Education.  People are starting to call upon the government to forgive these loans, stating that, with recent bailouts, why shouldn’t the government bailout the middle class from the crushing financial impact of these loans.

Let me state, I do not feel that we should forgive these loans.  These students went to college, whether they want to believe it or not, they incurred the debt, and it is their responsibility to pay off what they borrowed.  I can understand the issue, though, when the government is throwing money at bad business, debtors want their pass, as well. 

Below is a list of five things that you can do if you find yourself unable to pay your student loans due to the poor economy.  It isn’t a failsafe set of five, but it can help you cope with the inability to relieve your debt.

1. Talk to Your Lender:  The worst thing you can do for your credit rating is to break down communication with your lender.  Contact them immediately and let them know your situation and that you are willing to pay your loan.  If you default on your loan, it is going to hurt your credit score for the rest of your life and no one wants that.

2. Check out Payment Plan Options:  Just because you have a ten year loan doesn’t mean you have to pay that exact amount for the next ten years.  Contact your lender to see if there is another option you can do till you have a better paying job.  The federal government offers four different types of payment plans to choose from.  As of July 1, 2009, there will be another loan option available through the Federal Family Loan Education Program.

3. Wait for the interest rates to lower.  On July 1, 2009, the federal government is going to lower the interest rates on your student loans by half of a percentage.  This will lower the amount of money that you owe each month and the overall cost of what you will pay in the end.

4. Look for a deferral.  Most loans will let you defer the payment for a certain amount of time if you are out of work or do not have the money to pay your loan.  Once again, you need to contact your lender for more details.  Note, this doesn’t mean that you are scott-free when you defer your loan for a month or two.  You are still paying interest on those loans, you just don’t have to may anything for that month.

5. Cut Back on Hidden Expenses.  Take a look at some of the hidden expenses you have and cut back on those.  These extra costs, like: cell phones, gym memberships, club dues, online membership fees, cigarettes, and your cable television all add up at the end of the month.  Take a serious look at what you spend money on and see if you really need that.

It sounds harsh, but you have to keep your credit rating high if you ever want to own a home, buy a car at a decent percentage rate, or take out a personal loan.