People that default on their student loan usually find their credit drop. Government income tax refunds can stop and you may acquire wage attachments if you fail to take your student loan seriously and default on it.
If you follow a few simple guidelines you can easily avoid defaulting on your student loan. The first step to avoiding defaulted student loans is to keep the lines of communication open with your lender. “If you let your lender know immediately you’re having problems, it’s unlikely you will need to default.” one of my friends said with sarcasm. However, it is often this type of attitude that gets ex-students into trouble when they default on their student loans. There isn’t usually a problem if you get in touch with your lender. I shouldn’t have worried; getting a temporary suspension wasn’t a problem. A representative from the company explained carefully how the deferment process worked and what would happen until I was able to commence payments again. Within a week, the debt was frozen until I could make regular payments again.
There were other financial worries to take care of that wouldn’t be so easy so this deferment had been a big help. I managed to avoid a defaulted student loan but I knew that many of my other creditors would not be so helpful. Don’t forget though that interest is still adding to your loan whilst the suspension is on and it will cost you more in the long run. Despite the additional cost it is preferable to a defaulted student loan. If you check with your lender you may find it is possible to pay in the occasional contribution during the deferred period. It is not uncommon for banks to allow you to make interest payments only if you have financial problems.
So the amount you owe will remain the same during this ‘holiday’ period but you will avoid a defaulted student loan. For many students this type of financial arrangement enables them to complete their education and is a necessity. If the percentage of student loan defaulters gets too high then it will affect how much money is available for people who need financial assistance. Your student loan provider would prefer you communicate with them if the debt is becoming a problem.
Alternative payment arrangements or a deferment on the loan are just two alternatives to avoid a poor credit record. Responsible action of this type may mean that prospective students can still have the education they want.