Student Loan Default – Overview and How to Avoid It
Student Loan Default
Student loan default is basically when one doesn’t pay their payments one a student loan or loans during the time period of 270 – 360 days after they leave school. This can be due to the lack of resources, or any other reason, but once you fail to make payments, you enter into student loan default, or in other words your loan is declared defaulted. The bad thing about student loan default is that once it is defaulted deferment, which is an agreement between you and your loan lender of a postponement of payments, is no longer an option.
This is when your debt on the loan will be turned over to a collection agency after your delinquency period is over, which is the weeks or months of non payment time before it goest to a collection agecny. The student loan default not only still requires that you pay the loan amount, but you will also be charged with a fee for the transfer of the debt from your loan lender to the collection agency, and any other fee like court fees or paying for an attorney in the event you are sued for the loan. There are other details as well where if you have a student loan default it can keep you from receiving other financial aid, and some social security benefits being taken away, a percentage of your earnings can be taken from you and any tax refunds can be taken from you as a way to pay off your debt.
Student Loan Default – How To Avoid It
It is just a fact that often times when fresh out of college, job don’t exactly fall into your lap, and can take a while securing a job. Due to this fact, it may seem like an option to put off payments, but your shouldn’t at all costs. Below are 3 ways on how to avoid student loan default, so you don’t have to deal with any of the above afflictions.
- Student loan default can be avoided often times by choosing to consolidate your student loans. Consolidatin can help you group all your loan payments into one payment as well as extend the time in which you have to pay it back, meaning that your monthly payment will be lower. Although this option means that because of the extnesion in repayment time, you will end up paying more in the long run, you can always pay more when you get your job and make up for lost time. So consoldiation can be a great way to help you avoid student loan default.
- Student loan default can also be avoided by deferrment as said above. If you haven’t defaulted on your student loan yet, then this is a viable option to consider. Basically what happens in student loan deferrment is that you get to postpone your payments for a certain amount of time by providing proof that you are going through financial hardship. The only drawback about this plan is that once you start up with payments again, you will have to pay a larger sum each month than the original monthly payment. But all in all, this is another great way to avoid student loan default.
- The last way to avoid student loan default is to know precisely how long your grace period is. By knowing this you will know how long you have before you have to start paying off you student loans, which during that time you can get a part time job, if you haven’t found a full time job yet, and save up for a few months worth of loans, so then you will have more time to do a more extensive search for a full time job.
Student Loan Default – Conclusion
The main thing to remember is to communicate with your loan lenders when trying to avoid student default. Their are more likely to help you out if you are letting them know what your situation is instead of not calling at all. Often times this method of avoiding student loan default can result in them lowering your repayment fee for monthly bills enabling you to be able to afford payments.