Do you have a student loan? Is this loan overdue or simply at default? Do you feel you are alone? The sad fact is that you aren’t. The real fact is that more and more Americans owe on students loans each year. In fact, there are more student loans that are being defaulted than there are mortgages. Why? One main reason is that the students have now graduated and have not been able to find a job or have not been able to find a job that pays enough to allow them to pay for these loans.
A study was done on Federal Student Loans tracking these loans as far back as 1995. Of these loans, twenty percent of them are still in default. This is a huge number considering the amount of Federal Student Loans that are given out each year.
What happens to a person who can not pay this loan off when it becomes due? The interest on this loan will begin to pile up month after and month and the person ends up owing more. The person’s credit score also becomes tarnished. And don’t think filing bankruptcy can save this person. Currently, the rules of bankruptcy states that student loans can not be discharged in bankruptcy like credit cards can. This makes it even harder for those who are in bad financial states. What can one do then if they owe a student loan and this loan is beginning to become overdue?
• Deal with the problem. It is not going to go away and you may actually suffer from many ramifications if you do not handle this problem now.
• See if there is any way at all you can make extra money to begin paying this monthly bill. Cut back where you can.
• Finally, see if you can negotiate a smaller payment schedule. This may not work. But, you should at least try. Explain your situation. You might be able to get an extension on your loan or at least a lower monthly payment.
What can happen if you don’t repay your Federal Student Loan?
• Your wages can be garnished
• Your tax refunds can be taken
• If you are married, your spouse’s tax refunds can be taken
• Once you are old enough to receive Social Security, this can be garnished
• You may actually be denied the privilege of getting certain professional licenses needed to perform your job
• If you want to work in the government, they can deny you government clearance thus keeping you from getting the job you want
If you haven’t taken out a Federal Student Loan, yet, reconsider this move.
• Make sure it is your only option.
• Consider going to a community college for two years and a public college for your final two years of schooling. This can save you about fifty percent in fees.
• If you must take out a Federal Student Loan to pay for your education, take out only what you need and do some calculations. Find out what your career of choice should be paying you that first year and use this calculation as a basis to what you borrow. Try to keep the amount you borrow under this amount, if you can.
Remember all loans; especially Federal Student Loans will have to be repaid. Don’t forget about them and just assume they will magically go away or magically pay themselves.