The Consequences of Student Loan Defaults
You only have to look on the Internet for a few minutes before you can find people complaining about their student loan payments. You might even be tempted to default on your student loan if you're done with your education and don't actually have an item to hold in your hand that motivates you to pay that loan.
No matter what the payment amount is or what your reasons are for not wanting to make the student loan payment, know that there are consequences that you may not be prepared to deal with. You might look at it as if the government can't very well repossess your education, but you actually do have plenty of things at stake when you try to default on a student loan.
The most basic rule of thumb is that defaulting on any loan virtually guarantees that your lender will never offer you another loan. While you may think it's a good financial decision to default on your student loans right now, you may not be impressed with yourself when you want to continue your education later and find that you cannot get a student loan. Not only that, but you may have ruined your eligibility for any other type of government loan as well.
No matter how hard creditors try, they cannot access your taxes. The only people who can take money out of your tax returns are those that work for the government. Default on your student loans and you may find out in a hurry just how easy it is for the government to take their payment in the form of your tax returns.
There are those that believe student loans have no impact on their credit. Don't make this mistake. Lenders look at your entire credit report and that includes your student loans. You're better off to make the payments and avoid having negative reports on your credit history. Your lender will consider that you have an outgoing payment to your student loans, but you can even take steps to lower that payment so that it doesn't present a high outgoing amount.
Instead of having your tax returns taken and seeing negative reports on your credit history, why not take steps to make the payments at a rate you can afford? Most people who default on their student loans do so because they can't afford to make the payment. However, your payments can be based on your income, so unless you're living above your means, you should be able to make the minimum payment and avoid defaulting on your student loans.
You may also be able to defer your loan payments. If you contact your lender and apply for deferment based on your income or lack of available jobs, you may be able to put off your payment until you can find a position within your field. You're still better off if you use the income calculator that the government provides to figure up your payments based on your income, but deferment may be a viable option for you as well.
Keep in mind as you make the choice of whether or not to make your student loan payments that the reason you got a student loan at all was so that you could get an education that would result in a degree that could lead to a better paying position than you are currently in. If you are unhappy with the result or find that you are unsatisfied with your education, you still owe the funds that were loaned to you and must understand the consequences of student loan defaults.
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