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:
- You Could Get Sued. Private lenders and the government 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.
- Your Federal Benefits Could Be Taken. The government can take some of your federal benefit payments (like Social Security retirement benefits & Social Security disability benefits) to use as reimbursement for student loans.
- 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 expensive items is out of the question.
- 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.
- 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).
- 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.
- 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. You may run into trouble finding a place to live if you haven’t been paying your student loans.
- No More Federal Financial Aid. It will be nearly impossible to receive more federal financial aid until you repay your student loan in full.
- 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.
- Dropping Out of School Won’t Help. Even if you drop out or switch schools, you will still need to repay the student loans you took out.
For more information:
Student Loan Repayment: Stay on Track!
Federal Student Loan Consolidation
Tags: default on student loans
, student loans
, student loans debt
The Freedom Alliance Scholarship Fund honors Americans in the Armed Forces who have sacrificed their life or been permanently disabled from defending our country, by providing educational scholarships for their children.
The Freedom Alliance Scholarship Funds helps offset the high cost of college education for the sons and daughters of American heroes. It is also a reminder to the recipient that their parents’ sacrifice will never be forgotten by our grateful nation.
Application Deadline: July 30, 2010
Eligibility: Applicants must be a dependant son/daughter of a U.S Soldier, Airman, Marine, or Guardsman who has (either):
- become permanently disabled (100% VA disability rating) as a result of an operational mission or training accident
- been killed in action (line of duty)
- been classified as a prisoner of war (POW) or missing in action (MIA)
Also, applicants must be:
- Currently a senior in high school, a high school graduate, or enrolled as a full-time undergraduate student
- Under 26 years old (at the time of application)
Your application packet must contain the following items:
- Application form
- Copy of your government issued photo identification (Drivers License, Military ID Card)
- Certificate of death or rating letter from the Veterans Administration disability
- Official high school or college transcript
- Photo of applicant
- Photo of qualifying parent
Scholarship checks will be mailed directly and endorsed to the scholarship winner’s school.
For more information, visit the Freedom Alliance Scholarship Fund website.
Tags: military scholarships
One of the most common questions we get asked about financial aid is what the income limit is to qualify for grants and other financial assistance – in fact, it’s been a topic of discussion on Facebook. Many people assume that your income is the one hard and and fast variable that determines your financial aid eligibility, but the truth is that there is no income limit for financial aid.
There is a mathematical equation that the government uses to determine what financial aid you are eligible for. This equation takes into a number of financial items that may apply to you, including:
- Enrollment status (full-time, part-time, etc.)
- Your dependency status
- The number of people in your family
- The number of people in your family who are attending college
- The state you live in
- If one or both parents work (if you are a dependent student)
- The amount of money you have in your checking & savings accounts
- Your earnings from work
- Other tax-deferred or untaxed income from child support, grants & scholarships, military pay, etc.
- The income tax paid the previous year
- Your investments & assets
- Your parents assets (again, if you are a dependent student)
Some folks may go along the assumption that the less they make, the more financial aid they will qualify for. While that’s not necessarily true, need-based federal education grants such as the Pell Grant are typically awarded to undergraduates with a high degree of financial need. In fact, most Pell Grants go to students with a total family income around or below $20,000. But, students whose families have a total income of up to $50,000 may be eligible too.
The only way to know what financial aid you will get is to fill out a FAFSA. The FAFSA asks you a number of questions that help determine your Estimated Family Contribution (EFC), which is the amount of money the government thinks you and/or your family can pay for your tuition for that school year. For more information on the EFC and the formula used to determine your eligibility, see How Financial Aid is Distributed.