Woburn, MA (PRWEB) June 1, 2010
Student loans are a type of financial aid that needs to be repaid to the lender overtime. The rate at which borrowers are defaulting on their student loans continues to rise. People have looked toward the poor economy as the explanation for why borrowers are defaulting on their federal student loans at higher rates. The 2008 draft fiscal year national student loan cohort default rate was 7.2%, which is up from the official 6.7% in the 2007 fiscal year.*
With more and more students defaulting on their student loans, EducationGrant.com wants to clarify what can happen to you. If you default on your student loans - meaning that you are more than 270 days delinquent on your loan repayments - there are serious consequences!
Here are 10 things that could happen if you default on your student loans:
1. You May Get Sued. Government and private lenders could sue you to collect defaulted student loans. And unlike other debts, there is no time limit on suing to collect back student loans so you could possibly be sued indefinitely.
2. Your Federal Benefits May Be Taken. The government can take some of your federal benefit payments including Social Security retirement benefits or Social Security disability benefits, to use as reimbursement for student loans.
3. Tax Refund Offsets. Until your student loans are paid in full, the IRS can intercept any income tax refund that you may be entitled to. This is one way the Department of Education annually collects hundreds of millions of dollars, and is a popular method to collect payment on defaulted loans.
4. Your Credit Rating Will Be Ruined. Your credit rating will be wrecked for at least seven years, so trying to borrow money for a car, home, or other expensive items is out of the question.
5. Your Paycheck May Dwindle. The government can take a limited portion of your wages if you don’t pay student loans back (up to 15% of your disposable income).
6. You’ll be Harassed by Collection Agencies. Collection agencies will call your home, work, your family members, and anyone else they can track back to you. Until you start to pay, they will continue to harass and call.
7. Forget Renting Apartments. When you submit an application to rent an apartment usually realtors, apartment owners, or rental agencies run a credit check on you to ensure you will make payments and pay rent on time. If you haven’t been paying your student loans, your credit check will reflect that.
8. No More Federal Financial Aid. It will be nearly impossible to receive more federal financial aid until you repay your student loan in full.
9. Associated Collection Fees. Loan agencies may charge you collection fees on your unpaid student loans. Also, collection agencies charge the Department of Education a commission, which you end up paying. So in the end you actually have to pay back your student loan with interest, the collection fees, and the commission.
10. You Can’t Escape Your Loans. Even if you drop out or switch schools, you will still need to repay the student loans you took out.
EducationGrant.com is part of the Avenue100 family of websites. As new information becomes available, content is continuously updated and added. For the latest financial aid information, please visit out blog at http://www.EducationGrant.com/blog.
*Source: U.S. Department of Education. Electronic Announcement posted May 2, 2010. http://ifap.ed.gov/eannouncements/043010FY08DraftStuLoanCDR.html
Created in 2008, EducationGrant is a free online tool that provides financial aid resources that help you pay for your college education. EducationGrant delivers news, tips, information, and resources relating to financial aid, grants, student loans, and scholarships. Learn more at http://www.EducationGrant.com/.
About Avenue100 Media Solutions
Avenue100 Media Solutions, Inc. is a leading analytics-based performance marketing company that helps institutions acquire qualified customers. A Washington Post Company, Avenue100 operates a network of Web properties, including CourseAdvisor.com, EducationGrant.com, GetTheJob.com, OnlineDegreeFinder.com, and the Washington Post education site, which collectively generate over 5,000,000 unique visitors per month and hundreds of thousands of leads per month. Learn more at http://www.Avenue100.com
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