Student Loans In Default: Consequences Of Defaulted Student Loans

By Author: michel smith
Total Articles: 97
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Although sanctioning of a student loan will help you to pursue higher studies, each year, the United States is facing an increased number of cases that feature student loans in default. There may be a number of cases that might lead to a default in the student loans. Dropping out of college/university before completion of a degree means you will mostly possibly fail to land up with a big job. This is one of the major reasons that cause default in case of student loans.

Although failure to land up with a big job and unemployment are the major reasons for defaulting in the student loans, other factors like low income or poor salary may also make an individual unable to repay the loans. As such the interest keeps on adding to the principal amount and it is not for long before that individual finds himself or herself surrounded on all sides with huge financial burden. A defaulted student loans borrower also has to face several consequences other than losing peace of mind and a good night’s sleep.

Federal or private student loans as the case may be, student loans in default ...
... will result in a host of problems. For starters the Internal Revenue Service will prevent you from getting any sort of tax refund even if you are eligible for those tax exemptions. The federal government will start their job by taking away a part of your federal benefit payment. It may even take up to 15% of your disposable income. As a student who just graduated from a college with no decent job, you cannot afford to let go of whatever little money you have. Also there will be bad impression about your credit ratings. So if you are in trouble you should think of companies that offer solutions to defaulted student loans.

There are several solutions that a student can opt for in case of student loans in default. The most usual methods of taking a student out of the default problem are to opt for deferments and forbearance. These solutions will provide you immediate relief and you would not be required to pay the monthly repayments or would be required to pay only a small part of the repayment amount. You can qualify for these solutions only if you have enrolled yourself for some other class or you are still unemployed even after graduating. But definitely the best method to get defaulted student loans borrower out of trouble is through loan consolidation.