The Consequences of Student Loan Debt and How to Get Out of That Hole
There is nothing quite like the thrill of going to college, getting a degree, and starting your life on your own. It is like living the dream. That is until you get that letter in the mail that says that it is time to repay your student loan. Repayment can be tough to tackle at first but it is important that you pay back what you owe or you could end up in a financial hole. Here at A+ Financial Aid, we are here to tell you about the importance of repaying your loans and a few tips for how to do so.
If you either decide to not pay your loans at the due date or you don’t think you have the funds to make your payment then you will start to have account issues. After 90 days, your loan payment will become delinquent, which means that you will be reported to the three major credit bureaus. If that happens then your credit score will start to fall, and if you don’t start paying, then you could have trouble making large purchases in the future, like a house or a car.
In the case that you still do not pay within 270 days, your account will then go into default. That means that the entity that provided your student loans will then give your account over to a collections agency, and from there, you will start to get calls from collectors asking for their money. It is an unpleasant experience that most people want to avoid.
The agents at the collections agency will call you and the people you are associated with until they get a hold of you. If they are unable to get a hold of you, or they do and you are uncooperative, then they will refer your account to a higher power, most likely the federal government.
At that point, they can take more drastic measures, including garnishing your paycheck. That means that the government will start to take money away from you every payday, sometimes up to 15%. If that doesn’t work, then the next step may be to seize your tax refund, which is not ideal if you have a family to support.
If your loans are in default and you ever decide that you want to return to school then you may not be able to enroll. That will likely be the case because you may not be able to get new school loans if you haven’t paid back the old ones.
The good news is that all is not lost. Talk to the collectors who call you and ask to be put into a loan rehabilitation program or ask to settle your loan. You won’t get a new loan right away but in three-nine months, you will be free to enroll again.
Repaying Your Loans
While you can settle with the collection agency, the easier way to go is to pay back your student loans when the bills arrive. That way, you can enroll in school right away and you won’t be punished by the government. If you need to make some extra money, consider getting an additional part-time job or finding a side hustle like driving for a food delivery company or becoming an online tutor.
Another option is to try and start your own business. You can begin by applying for a bank or private lender loan so you can get the materials you need and start your operations. If you go with this option then you will want to be current with your student loans or the chances of getting a new loan are slim to none. After that, you can begin to market your product online, make your own website, and start charging for your services.
Whatever method you use to pay back your loans, it is important that you take this matter seriously. That way, you won’t be faced with garnishment or tax penalties and you’ll get the loans paid off faster. If you would like to know more about the advice discussed here, then check out A+ Financial Aid and our helpful blogs.