Student Loan Default - Is There a Way Out?
{ Posted on 3:15 AM
by SHANI
}
If you have borrowed money in order to pay for your education, you want to avoid getting into student loan default if at all possible. Default student loans create havoc with your credit score, and lead to a bad financial situation for a long time.There is help for those with student loan defaults. How can I get my student loan out of default, you may be asking. Rest assured there are legal ways to get out of student loan default! There is help!
What is a Default Student Loan
Student defaulted loans are any federal education loans that are not paid back according to the payment schedule on the promissory note. The loan can go into default after several missed payments. Two loans, the FFEL and the Direct Loan program, have a specific number of days that qualifies as default. For these loans, default occurs when 270 days progress without a loan payment. Having a loan in default is a serious blot on your credit score, and is something to take very seriously.There are severe consequences to this problem, even with private student defaulted loans. The failed payments go on the student's credit history for many years, and often is the first item on the credit history. This makes it difficult for the student to be approved for other credit in the future, such as a mortgage or car loan. The IRS can withhold income tax refunds until the loan is paid back. A student who has default student loans can even have their wages garnished until the loan is out of default. Harassing phone calls from collections agencies and other problems follow a defaulted loan, making it important for students to avoid default whenever possible.
Possible Causes of Defaults
Many students end up in student loan default because of poor financial planning. They borrow more for their education then they can realistically pay back. When you add to this other debt, such as a car payment or mortgage, many newly graduated college students are setting themselves up for future financial disaster.Another possible reason for student loan default occurs after the money has been borrowed. Sometimes, college graduates have trouble finding employment after they graduate. This can lead to default private student loan problems, and create difficulty to the student. This cannot be avoided, provided the student has been actively looking for employment. Student loan default statistics seem to indicate a growing problem with those with debt not being able to find employment. This is why legal ways to get out of student loan default have been created.
