If you graduated from college or vocation/trade school this spring (2010), (considered your separation date from college), with student loans and a 6 month grace period, your loans are probably due this December 2010 or January 2011. Its important that you make your payments on time.
Student loans are almost impossible to discharge, they have very few consumer protections, so you are at the mercy of your lender or servicer, so avoid late payments which will increase your interest rates or cause you to lose your incentives or discounts. Paying late will cause the unnecessary compounding of interest and will add penalties and fees to your loans.
Not paying at all, will cause your loan to go into default. Defaulting on student loans can have dire consequences which could impact your entire life negatively. Have I scared you? You'll thank me later.
Even if you haven't received payment requests from your student loan lender or servicer, it is your obligation to make your payment on time. So call your lender, or visit their website, create an account and get the information.
Send this post link to a friend who graduated along with you and ask them to pass it on.
Showing posts with label student loans. Show all posts
Showing posts with label student loans. Show all posts
12.13.2010
Consequences of Student Loan Default
Defaulting on your student loan has some expected consequences such as being reported to the Credit Bureaus, which will definitely impact your credit score negatively.
You may also find yourself impacted by any or all of these other situations:
• Your federal or state income tax refunds or other federal or state benefits will be used to reduce your loan balance.
• Collection fees and costs, court costs and attorney fees will be added to your loan.
• If you have a state professional license you may lose that license, or be denied one. How ironic is that? You incurred all those student loans to gain a profession and now you will be at risk of losing your license and with it your ability to earn an income from that profession.
• You can lose your eligibility for any other federal student aid and most other federal benefit programs, which may leave you with private loans as your only option. These loans do not generally have as favorable an interest rate as federal loans.
• You can lose your eligibility for loan deferments or forbearance. If you cannot get a deferment or forbearance you will lose the ability to postpone your loan payments in periods of economic hardship or personal emergencies. You want to maintain this option.
• You may be required to repay your entire loan balance at once. Hope you won the lottery.
• You could be sued by your lender. Who wants a long drawn out legal battle which will probably not end in your favor.
• Your wages could be garnished, which means that payments will be forcibly taken from your paycheck.
• You may be unable to consolidate your loans, which means if you have multiple loans, you will have to make at least the minimum payments on each loan, which cumulatively may be an unwieldly amount, and which will increase the length of time to pay off your loans, and the amount of interest on your loan.
Play it safe and make your payments on time.
You may also find yourself impacted by any or all of these other situations:
• Your federal or state income tax refunds or other federal or state benefits will be used to reduce your loan balance.
• Collection fees and costs, court costs and attorney fees will be added to your loan.
• If you have a state professional license you may lose that license, or be denied one. How ironic is that? You incurred all those student loans to gain a profession and now you will be at risk of losing your license and with it your ability to earn an income from that profession.
• You can lose your eligibility for any other federal student aid and most other federal benefit programs, which may leave you with private loans as your only option. These loans do not generally have as favorable an interest rate as federal loans.
• You can lose your eligibility for loan deferments or forbearance. If you cannot get a deferment or forbearance you will lose the ability to postpone your loan payments in periods of economic hardship or personal emergencies. You want to maintain this option.
• You may be required to repay your entire loan balance at once. Hope you won the lottery.
• You could be sued by your lender. Who wants a long drawn out legal battle which will probably not end in your favor.
• Your wages could be garnished, which means that payments will be forcibly taken from your paycheck.
• You may be unable to consolidate your loans, which means if you have multiple loans, you will have to make at least the minimum payments on each loan, which cumulatively may be an unwieldly amount, and which will increase the length of time to pay off your loans, and the amount of interest on your loan.
Play it safe and make your payments on time.
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