Many students will graduate from college and find themselves in a wealth of student loan debt. Often times the student will not be able to pay their student loans because they have not been able to find employment that pays enough for them to keep up with their bills. It is important for the student to know the consequences of their student loan defaults and the obligations that they have signed for.
There is an option available to borrowers who are about to default on their loans. This is the option of deferment. It is also commonly known as “economic hardship”. What this means is that you can have a postponement of your repayments. When looking into this as an option you should contact your lender, speak to them about your situation and as for a loan deferment. You might be surprised as to how easy it is.
Delinquency Of Student Loans
When a student does not pay their student loan payments on time the loan will go into a default status. A delinquency should be considered a warning before the default actually takes place. You will fin that there are more delinquent loans out there than there are loans in default. Delinquent loan with bad credit should not be considered as serious as default loans but they can still damage your credit.
The best option you will find out there when it comes to finding a solution to your repayment issue is to contact your lender. Lenders are willing to help. They would rather see you working to pay your loans with no credit check rather than having it go into default and having to send notices in the mail and through email asking you to pay or else.
Once you have allowed your loan to go into the default status you are no longer able to work with the lender to have the payments deferred. This will also hinder any chance of you being able to obtain future financial aid until the entire loan amount has been paid in full. The problem with letting the loan go into default is that your original monthly payment will no longer apply. You will be required to pay the total amount in full.
Often times the lender will give your case to a collection agency. When this happens it is highly possible that you will also have to pay the fees of the collection costs as well. Once these charges begin you will see the amount to be paid back grow rapidly?
It is also possible that your wages will be garnished as well as your federal or state tax refund. There will possibly also be legal action and of course your credit score will suffer.
Defaulting on a student loan is serious business. Not only will you not be able to obtain further financial assistance for schooling but it can also cause you to not be able to receive a home mortgage or even a car loan. The smartest thing a borrower can do is to pay their bills. If this cannot be accomplished for one reason or another you can contact your lender and work out a payment plan that is affordable to you at that time.