WITH the cost of education getting more unrealistic and costly, it’s no wonder that students can easily accumulate student loans by tens of thousands, even by hundreds of thousands of dollars.
Amid a weak job market, defaulting on student loans is skyrocketing and will probably continue to rise. While it is possible to declare bankruptcy and discharge debts, student loan is one of those that stick with you for life or at least for the duration of the repayment program. We must have heard a few stories of student loans being discharged in bankruptcy but these would have to qualify under rigorous and stringent criteria and they are, and will remain, exceptions to the general rule. The fact is, student loans are hardly dischargeable even in bankruptcy.
While student loans help you achieve your dream for a good education, defaulting on payments could be a nightmare. The adverse effects of doing so could have short and long term consequences and they’re not something you could easily break away from.
The government has prevailing tools and resources to track and obligate borrowers defaulting on student loan payments. Here’s what you can expect to happen if you stop paying for more than 270 days- that’s when a loan is considered to be in default:
- Withholding of your federal and state tax refunds.
- Wage garnishment.
- Federal benefits taken including Social Security retirement benefits and Social Security disability benefits.
- You can get sued.
- Your credit report gets affected and your chance of not passing credit checks for employment increases.
- You can get refused for any additional federal aid.
- Possibility of not being able to renew a professional license.
Additionally, once you default, any existing repayment plan becomes null and void and you might be required to pay the full amount of loan immediately. Payments will then be relinquished to the Department of Education or a guaranty agency for collection, which poses a potential to augment the amount you have to pay up to 18.5% due to stiff penalties and interests.
If you are struggling making payments, your best remedy is to negotiate a repayment plan with the creditor. Getting into a default status is a worst-case scenario you should avoid with diligent and careful pre-planning. It is best for your financial future to discover your options. Your options could include a loan repayment plan, loan consolidation, loan deferment, or loan forbearance. Your ombudsman, lender or school is a great source to start with.
* * *
Evangeline can be reached at her marketing location at the Ground Floor of Eagle Rock Plaza (in front of Jollibee), 2700 Colorado Blvd., Los Angeles, CA 90041 or at her business address at 450 N. Brand Blvd., Ste. 600, Glendale, CA 91203, phone number (323) 356-3803 or (323) 254-6787.
* **
The purpose of this article is to provide information of general interest to our clients and prospective clients. The information provided is general in nature and should not be considered complete information on any product or concept described.
( Published July 17, 2010 in Asian Jounal Los Angeles p. C4 )
| < Prev | Next > |
|---|
