Defaulting on student loans can have serious consequences:
The government can garnish your wages, withhold your tax refund or send
a collection agency after you.
It will mess up your credit rating, making it difficult for your to get
a car loan or a mortgage. It can also prevent you from getting a job
because the loan default will show up on a credit check for employment.
You are not officially in default until you have gone nine months without
making a monthly payment but do not wait that long if you are having
financial difficulty. There is help out there if you know the steps and
know where to look.
1st - Contact the Lender asap to attempt to renegotiate the loan terms
Your lender may be able to work out a new plan, in which you both
agree on an affordable monthly payment.
2nd - You may be eligible for a deferment or forebearance,both of which
allow you to postpone payments. In a deferment, no additional interest
accrues, while you are not making payments. A forebearance interest
accrues but the lender tries to work with you. Check the specific
rules about who qualifies but you are only eligible for either if you
are not in default.
3rd - Check out these websites for HELP:
The main federal financial aid website: www.direct.ed.gov
Federal Student Aid www.ed.ed.gov
A nonprofit org runs www.studentloanborrowerassistance.org
Low cost legal help www.lawhelp.org
(click on state and student loans for info before contacting a lawyer.
Remember YOUR FINANCIAL FUTURE IS IN YOUR HANDS
Sheila McKinney
