Top 10 reasons to not default on your student loans.
- You will become liable for your student loan as well as the costs associated with collecting your student loan. This could include court related costs and attorney fees.
- Your loan in all probability will be handed over to a collection agency. Do you really want to deal with the hassle they put you through?
- Your wages could be garnished. You have some respite here as the federal law limits the amount that could be garnished to about 15%
- You could be sued.
- Your tax refund cheques could be intercepted to pay for you pending student loans.
- Your social security benefit payments may be withhelf by the federal government.
- Your credit will be shot to bits. You will find it very difficult to obtain an kind of loan such as an auto loan or credit cards or even mortgage going forward. Even future jobs might be at risk if you have a very low credit score.
- You cannot defer your loans since you will automatically be ineligible for loan deferment.
- When your student loan goes into default, the full remainder of the loan amount will become due immediately. All possible options such as forbearence and deferment are no longer an option
- You will be ineligible for any kind of federal financial assistance until you repay your loan completely or make a plan to pay a minimum of six consecutive monthly payments without any lapses or delays.
Ok, I know that makes 10 reasons but I’m going to add another just to keep you from thinking about defaulting. Any type of federal interest benefits will be revoked. So there you go, defaulting your student loans can get you in a bit of a pickle. Work out some form of arrangement, maybe a deferment or a forbearance but do NOT default on your student loans.
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