Mona, Cewek SMA Genit Batam

Student Loans: What Happens If You Default On Your Loan

Many students take out federal student loans such as Perkins loans and Stafford loans every year, because they need assistance in funding their college education. They are a huge help to a lot of people, and allow students to gain a higher education where they otherwise would not have been able to afford it. Once you leave school though, you need to pay these loans back in full and on time, in accordance with your loan agreement and repayment plan.

There is a grace period between graduation and having to start your repayments, which is six months on a Stafford loan and nine months on a Perkins loan, but this is generally expected to be long enough for you to be out of college for you to find a job and be in a position to start repaying your debt.

If you are unable to make repayments for reasons beyond your control that have left you in financial hardship, for example if you are unable to find work, have lost your job, or have been unable to work for health reasons, you may be allowed to get a deferral approved on your loan so you can have up to three years off from making repayments. If you aren't granted a deferral, you can request forbearance.

This is a form of relief where your payments can either be stopped altogether or reduced for a period of up to twelve months at a time (for an overall period of no more than three years). You need to inform your loan provider of any difficulties you are having making repayments as soon as you are aware of them so you can start the process of getting a deferral or forbearance approved, because if you don't you will default on your loan and this has very serious consequences.



If you default on any loan, including a federal student loan, your loan provider, your college, and the government can all take action against you in order to recover their money. This can involve suing you, deducting payments automatically from your pay, and withholding any tax refunds you would normally be owed. Notice of your default will also be supplied to credit referencing agencies, meaning that you will find it very difficult to get any credit products from any outlets in future, including mortgages, credit cards, and any other loans you may need. You will also be unable to get any further student funding should you ever want to go back into education.

The effects of a default can be very serious and last for years, and cause complications for you later on when perhaps your financial situation is better and you want to be able to buy a house or similar. For this reason it is vital that you stick to your legally binding repayment agreement, and notify your loan provider of any problems in good time so that action can be taken to help you.

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Student Loan Debt Consolidation Tips

There's something about credit card money or student loan money that people find hard to take seriously. You're young when you take on student loans; it's hard to really get a feeling for how difficult money usually is to make. The $20,000 or $30,000 that you take on can easily seem like Monopoly money. All you need to do is get on the Sally Mae website, fill in a simple form and wait for the money. Shortly before graduation, when you begin applying for jobs all around, and you begin to see how tough it can be to make a decent salary, that's when it sinks in - you have to pay about $300 every month. At least three out of four people entering college leave at the end with some kind of massive student loan. It's a major problem. One of the first things that can occur to anyone struggling with a clutch of seven or eight student loans is this - student loan debt consolidation.

Doing this can really lower your payments in a way that can make all the difference to a struggling young graduate. Not only does it simplify everything to have one or two loans to pay instead of seven or eight, it can actually make it cheaper every month. Every loan comes with a high minimum payment. Bring everything together under consolidated loan and you have to pay just one minimum payment. And then of course, there's the hope that consolidating helps lower your interest rates and helps lower your payment in general by stretching out your repayment period.

Not every student loan debt consolidation package works that way though. To begin with, federal student loans come with fixed interest rates these days. This means that with federal loans, student loan debt consolidation doesn't really lower your rate that all. It only simplifies things and it could help stretch your repayment period out (although you'll have ended up paying thousands of dollars more in interest by the time you've paid everything down).

You should only consider student loan debt consolidation plans if you're having a great deal of trouble making your payments right now -in the hope that things will improve in the future. Because while any kind of consolidation you take on will certainly lower your monthly payments, you really will end up paying dearly in the end in added interest.



Starting in 2009, borrowers have been able to opt for what is known as an income-based plan. They work out a certain percentage of your salary that you need to pay every month. They don't charge you a fixed sum. The good news is that you don't need to have opted for such a plan going in. You could opt for an income-based plan at any stage. The great part here is that when you do this, you reset the clock on your repayments; you get a fresh 25 years.

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