Student Loan Default Rates – How to Avoid Student Loan Default Rates
Student loan defaults are one of the most feared terms in the world of college financing. For many prospective students, paying off their student debt is the culmination of their education and the best investment they will make as a young adult. Unfortunately, sometimes going into college isn’t cheap, and when you graduate, you may find yourself owing thousands upon thousands of dollars in student loan debt. This can be overwhelming financially and emotionally for many students. Fortunately, there are ways you can avoid the worst of student loan debt and instead enjoy a well-rounded education.
Avoiding a student loan default can be difficult, but it can be done. There are numerous consequences which can arise from allowing your student loans to go into default. Here are just some examples of reasons you ought to avoid student loan default absolutely at all costs: First, by not paying your student loan, you are damaging your credit. Your credit scores will take a huge hit, and depending on what kind of default you choose to commit, this could take years to recover from. Even then, you could find yourself unable to get another loan or credit card for another seven years or more.
Second, by not paying your student loans you are risking the future of your social security payments. The social security number is something that is used all the time, whether you’re applying for a job, going on a date, or even applying for a rental home. If you default on this social security number, you risk losing your financial future. If you lose your social security number, lenders will not be able to use it to collect any debts from you. In short, a student loan defaulting can literally mean the end of an economic life.
Third, if you don’t pay your student loan defaulting, you can be charged income tax by the IRS. This could be very bad news, especially for someone who may have a large mortgage payment due in a few months. Not only does this affect your mortgage payment, but it also means that you could be responsible for tax penalties and a great deal of interest on those same tax payments. It’s easy to see how student loan defaults could completely ruin someone’s financial future.
All of these things are bad enough on their own, but what’s worse is that if you do not make your student loan payments on time, you are committing a federal crime known as “failing to pay child support”. Federal laws state that anyone who does not pay child support must face jail time. It is actually a violation of the rights of the federal government to fail to pay student loans or child support payments. Although it may not seem like a big deal now, in the next few years you could find yourself in a very tough situation.
If the federal government tries to garnish your wages, you could go to jail. If you are in default on any student loan, the federal government can contact your employer to get the salary that you used to pay your bills. If you fall behind, the collectors will start calling your employer first. The worst part is that if you are unemployed, the collectors will begin calling your friends and family members. If your friends or family tell them you fell behind on your payments, you will be in serious trouble.
Now that we’ve discussed the scary possibilities, let’s talk about some ways that you can avoid student loan default rates. The first thing that you can do is find a way to increase your income. Some ways to increase your income are starting a new business, getting a part-time job, or selling some of your personal items. You need to make sure that you have enough left over after making all of your extra income to avoid default. In addition, it is important to remember that the lenders might also be able to seize your vehicle, if you happen to be caught in an automobile auction.
When you enter default with your student loan, your first priority is to find a rehabilitation program that will allow you to repay the full amount. Once you have found one, the second step is to find a way to make your payments until your rehabilitation period is complete. With these tips, you should have no problem repaying the full amount of your debt.