Defaulted Student Loans
Once you have left school and your federal student loans are in repayment it is important to make your payments on time. Some students and parents get behind on their Stafford loan, PLUS loan or Graduate PLUS loan payments, feel overwhelmed, and before you know it you haven’t made a payment in 270 days and your loans have gone into default. Your lender must make an aggressive effort to collect but if that fails your loan is turned over to the guarantor. Now it starts getting expensive.
The guarantor has several options at their disposal for collecting your loan payments• US treasury offset – your federal and state income tax refunds may be garnished.• Turn the loan over top a professional collection agency – fees and penalties may be up to 25% of the total principal and interest due.• Wage garnishment – your paycheck may be garnished for up to 15% of your disposable income.• Legal action – you can be sued for the balance of the loan plus court costs and lawyers fees.• Credit agencies notified – a defaulted loan stays on your credit report for a minimum of 7 years.
Other penalties when your Stafford, PLUS or Graduate PLUS loans enter default:• You lose any deferral and forbearance rights• You cannot receive any further federal aid• Generally your loan is due in full upon defaulting
Even if you pay your federal loan off it will still be noted as defaulted, paid in full on your credit report and counted as a black mark.
Defaulting on your federal loan must be avoided if at all possible. If you are having trouble making your payments contact your lender, they may be able to help you work out a payment plan you can afford. Consolidation may be your best option in the long run, it lengthens the term of your loan which lowers the payments and has several repayment plans to fit anyone’s budget. Contact Federal Education Services about a Stafford, PLUS or Graduate PLUS loan consolidation before you slip into the default abyss.
Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at http://www.feded.net
Article Source: http://EzineArticles.com/?expert=Matt_Kelly
1 comment:
When I think of defaulted student loans, I get vexed because I would not like to fall prey to this embarrassing scenario, not for one second! Defaulted Student Loans can get you so devastated that it irks for the rest of your life. Yet it may not be your willpower for it to happen. It may have been an unavoidable reason, like problems at home or incapacitation. But then you can not ignore the fact that some of us disregard responsibilities to pay for the student loans and as a result keep a bad credit history.
Poly Muthumbi is a Web Administrator and Has Been Researching and Reporting on Student Loan Consolidation for Years. For More Information on Student Loan Consolidation, Visit Her Site at DEFAULTED STUDENT LOANS
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