Monday, October 25, 2010

Don’t Default on Your Student Loans!

Congratulations!!! You have to start paying off your loans within the next month! YAY!!! (OK. I’m sorry for the sarcasm.) Many recent grads are still struggling to find work and making student loan payments may be tough. Despite the fact that you may unemployed or underemployed, whatever you do, do NOT default on your student loans. DON'T DO IT! DON’T…DO…IT! Not paying back your student loans can get you into a lot of financial trouble. The following things can happen if you are delinquent in your loan payments:
  • Your entire loan balance will be due immediately.
  • You lose eligibility for loan deferment.
  • You won’t be eligible for additional federal student aid. (You do want to go to grad school right?)
  • Your account will be turned over to a collection agency and you will have to pay additional charges, late fees, and collection costs.
  •  Your credit will go down the toilet. Since your credit will be trash, you might not qualify for credit cards, a car loan, a mortgage, or renting an apartment or you’ll qualify for an astronomical interest rate that will cost you more money.
  • Forget about a tax refund.
  • Uncle Sam will garnish your paycheck if you ever do find a job.
  • It may take longer for you to find a job or get a professional license if employers do credit checks.

I understand if you have bills that are high as the sky, but you have options if you cannot afford to make your student loan payments. Remember you can apply for a deferment or forbearance. You can also consolidate your loans or switch your payment plans. There is no excuse for you not to be responsible and take care of your student loans. If you don’t, it will cost you in the future. (I warned you.)

All information presented only relates to Federal student loans and is provided by the Department of Education. If you have private student loans, contact your lender(s).

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