If the decision comes down to which creditor to pay, remember that the U.S. government can garnish wages and intercept taxes upon default of federal student loan payments. Nearly all other creditors must first file a lawsuit and obtain a judgment. As a result, if you find yourself in arrears or in default of student loan payments, contact whoever is handling your loan(s) to determine if: 1) you are in the right payment plan; 2) whether you can lower or eliminate your payment based on your income; or 3) whether one or more of your loans can be consolidated for an overall lower monthly payment.

If you are already being garnished, a rehabilitation program is necessary. This requires that you make 9 payments within  10 months. For a Perkins Loan, you must make 9 monthly payments within 9 months. The payment amounts need to be “reasonable and affordable.” The unwritten rule is 15% of one’s disposable income, which is based on the Income Based Repayment formula. You can object to the 15% formula but you will need to complete some forms and many need to provide additional financial information to support your claim. Once you have completed rehabilitation, you can request an IBR payment, or another payment best suited for your situation that may limit the duration of your payments, allowing you to discharge any remaining debt.