The current recession has complicated private student loan repayment options in addition to creating a difficult  job market for recent college graduates.  If you find yourself in a tough spot (maybe your grace period just expired?), consider these strategies for managing your private student loans. They're better options than letting your payments go into default and damage your credit (and your cosigner’s credit).

1. Re-negotiate the terms of your loan. Depending on your school’s policy, you and your lender may be able to lengthen the term of your loan which will in turn lower you monthly payment amount. Remember though that a lengthier term means that you’ll be paying interest for longer…which means your loans will probably be more expensive in the long run. But this approach might make sense if times are tough.

2. Deferment. There are several ways to get your student loan deferred:

a) The first is through continued education. Enrolling in graduate studies will allow you to defer your loans until graduating again. Most loan providers have rules about what defines “continued education.” For instance, Citibank requires that you be at least a half-time student in order for your loans to be deferred. And remember, while in-school deferment is unlimited, interest will continue to accumulate on a daily basis.

Also, graduate schools usually comes with a heft price tag. So don’t just jump back into school to get escape your debt load – an even bigger pile will probably be waiting for you once you graduate. On the other hand, if you pursuing a higher degree fits into your career plans then you might want to consider going now.
 
b) You can also achieve deferment by enlisting in military service. Through Citibank, military deferment requires that a borrower be enlisted in full-time, active duty.

c) Aside from military service, a borrower can achieve deferment through health practice; some health professions require an in-house internship or residency and during this period of time your private student loans will be deferred.

d) Some lenders, such as Sallie Mae through their Career Training Loan, offer a monetary deferment whereby a borrower can pay a $10 deferment fee per month to defer repayment. This type of deferment has a one year limit; your lender may have a similar program.

3. Forbearance. If you’re undergoing economic hardship or financial stress you may qualify for forbearance. With forbearance, you can postpone paying your loans for up to a collective one-year time period. Forbearance can be broken up as many times as needed, as long as the cumulative time allotments add up to one year or less. Some lenders are stricter than others about qualification terms. For instance, some require documentation verifying claims to evidence unemployment, low income and/or financial responsibilities or dependents.

While this option is better than allowing your loan to fall into delinquency, it is costly because your interest will continue to accumulate.

4. Interest Payment Program. Through Citibank, if you are having trouble making standard, or level, payments, you can request to pay only the interest on your private student loans for either a 24 or 48 month period.

Again, allowing your private student loan repayment to fall into delinquency is the worst case scenario and should be avoided at all costs. For more specific guidance on how to go about achieving deferment or forbearance for your private student loan, try contacting your lender directly.