Scenario: Trouble repaying

Given Karrie’s situation, which decision do you think is best for her?


Karrie celebrated her graduation from college by traveling in Africa for six months. The grace period on her student loans has now ended. She spent most of her savings on the trip, but had a job lined up when she got back. After three months at the job, she got laid off! She quickly landed part-time work at a coffee bar, but she knows she’s not going to be able to make this month’s student loan payment. Karrie
Contact her lender right away. Discuss her situation and possible repayment options.

The consequences of your choice

See the consequences of this choice for Karrie and hear what your guide has to say.


“I’m so glad I called my lender right away. If I hadn’t paid and hadn’t called I would have been hit with late fees and I could have damaged my credit rating, too. Instead, I was able to get an unemployment deferment, which means I can postpone my payments until I can get a full-time job.”
Save the monthly statements for now. Stay committed to paying the lender eventually, plus interest.

The consequences of your choice

See the consequences of this choice for Karrie and hear what your guide has to say.


“Big mistake! I should have called my lender right away. I kept ignoring the statements and hoping the lender would sort of forget about me. I figured I had enough other things to worry about … like finding a job and paying all my other bills. Finally my loan payments were so overdue that I defaulted. That’s going to wreck my credit report for seven years and make it really tough for me get a car loan or even have a credit card.”
Pay what she can this month; pay more than the monthly amount later to get caught up quickly.

The consequences of your choice

See the consequences of this choice for Karrie and hear what your guide has to say.


“This wasn’t a good idea. I thought if the lender got its money eventually, the timing wasn’t too important, but I was wrong. I got hit with a lot of late fees and I was lucky that I didn’t default. Now I know that I should have called my lender right away. I could have worked with them to postpone repaying until my money situation improved.”
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When you get a federal student loan from a bank or private lender, a state agency or private company guarantees the loan against default.
Click the Next button to explore managing your money while you’re school.
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