As unemployment rises, more and more people are having trouble making ends meet. The government has many programs to help you prevent student loan default. If you are going through a difficult time, one of the best things you can do is communicated with your lender and try to create a solution before your loan goes into default.
Your lender will attempt to collect the loan up until your student loan payments are over 270 days past due. At this point, your loan is turned over to the US Department of Education or one of the guaranty agencies.
Where your loan will go depends on the type of loan you have. If you have a Federal Family Education Loan (FFEL), your loan will first be assigned to a state guaranty agency. It may later be sent to the Department of Education. Both Direct Loans and Federal Perkins Loans will be assigned directly to the Department of Education to be collected.
There are numerous consequences of defaulted student loans. If you have a defaulted student loan, your loan will be accelerated. What this means is that the full balance of the loan, plus interest and fees is now due. You will no longer be eligible for any type of forbearance plan or deferment. You may make partial payment to either the guaranty agencies or the Department of Education, however.
Many people do not understand the seriousness of federal student loan default. Unlike most debts, student loan debts are not dischargeable in a bankruptcy. And, there is no statute of limitations on them. This means they can be collected 30 years from now.
In addition to this, the IRS may withhold any tax refunds you have coming due until your loan is paid in full. If you have a solid income, it is likely that you will be sued and the government will get a wage garnishment against you. This means that they will get a portion of your paycheck each month before you do. The guidelines vary, but typically they can garnish up to 15% of your disposable income.
If you are a Federal employee, you will be un-voluntarily entered into the Federal Employee Salary Offset Program. This means that 15% of your monthly income will go directly to the government! Sounds fun, right?
Obviously if you are facing student loan default, you want to get the situation rectified right away. Two possible solutions are student loan rehabilitation and student loan default consolidation.
[ad#cj-2]
Related posts:
- Student Loan Payments Student loan payments are something that millions of American’s have....
- Bankruptcy Help – Understanding the “New” Bankruptcy Laws If you are like millions of others, these tough economic...
Related posts brought to you by Yet Another Related Posts Plugin.
You must log in to post a comment.