Every time you dream of enrolling for a college education for advancing your career, does the thought of increasing costs of education forces you to give your dream a miss? Well, no more; with the availability and accessibility of educational loan granted by both federal and private institutions, pursuing college education has got easier than ever. Now, in the face of such an alternative, the increasing default rates in the nation might put you in two minds regarding the benefit of availing student loan. The situation is surely a bit intimidating, but is never discouraging.
Not all people, pursuing higher education on loans end up becoming a defaulter, though the rates are certainly high. Such an increase in the rate of student loan defaulters can possibly be owed to reasons like, struggling economy and poor employment scenario. However, lack of repaying interest in students and overconfidence with finances also welcome such debt trouble in their life. To take up college education and lead life free of debts, all you need to do is understand the seriousness of being a defaulter and knowing the roads to financial recovery.
The Consequences of being a Defaulter
With its first blow, a default can lead to several consequences. From garnishment of paychecks, poor credit rating, loss of further financial helps to Loss of tax refunds and other state benefits - the list is quite compelling.
Such consequences can completely ruin your career alongside inviting a severe blow at your finances. Hiding from the issue of such concern will never solve your problem. The key to debt recovery lies in understanding the nuances of debt and default well. You must take up the situation in your stride and fight for recovery with the assistance of right recovery options.
Things that you Must Know
It is to be remembered that missing on a single payment does not make you a defaulter with federal student loans. Usually, it takes 270 consecutive days of non-payment for the loan to be in default and the borrower to be termed a defaulter. The period preceding a default is usually referred to as the delinquency period. The borrower during that time can seek to alternative repayment plans provided by the government or seek to options like, deferment and forbearance for avoiding the default. Here, is a look
- Loan deferment - this one usually allows you to postpone the repayment schedule against an increment term of one year. All you need to do is put up an earnest effort proving your financial hardships.
- Loan Forbearance - this also allows you to postpone the monthly repayment structure for a considerable period. However, the interest continues to add up throughout the term of postponing the payment.
In case, you end up being stuck with a defaulted loan, your road to financial recovery includes loan rehabilitation and consolidation. Defaulted loans have come up to be an issue of serious concern and you must take to the cause upfront for leading a better future financially. Taking up a loan for supporting your dreams might be easier, but keeping up with the repayment might not be; therefore, be realistic while, dealing with finances.