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If you are like many students, both current and recently graduated, then you probably have quite a bit of student loan debt that must be paid. Whether or not you have entered the repayment period of your student loan agreement, paying back your student loans is a serious manner. In fact, it is so important that you pay back your student loans that the government has designed strict collection enforcement regulations to be certain that they get their money one way or the other. If your student loan debt has gotten out of hand there are options to help you get back on track and avoid default.
What Happens If You Do Not Pay?
There are dire consequences that befall a student who ignores their student loan debt. First of all, the impact that not paying your student loans will have on your credit record is drastic. Like any other loan, government student loans whether they are Stafford, Perkins or other student loan are issued through a commercial bank but guaranteed by the United States government. Although the lender takes no risk in writing student loans because of the government guarantee of repayment, the government will and can collect on student loan debt using aggressive collection measures.
And unlike a private loan product, a government debt cannot be discharged under the federal bankruptcy code. Government debts can be collected by offsetting any refund that you are due when you file your federal law income tax return, or are due any payment from federal or state agencies. To collect student loan debt, the government can also garnish your wages and place liens against your property. The only way that you will ever get by without paying your student loan debt is if you become legally disabled under government rules.
Options To Avoid Default Of Student Loan Debt
Before your student debt gets out of control you need to know your options. One available option is forbearance of your student loan payments for a specific period of time. Another option is proving hardship for your personal situation. And a third option is student loan consolidation.
Student loan consolidation is a process of taking many student loans and combing the debt owed to many lenders. As you may have realized when you entered your student loan repayment, you likely are making payment to as many as ten lenders, especially if you are a graduate student. By consolidating your student loan debt, you will pay one lender each month and make only one payment each month. Consolidation of your student debt allows you to pay far less each month on one debt as opposed to making many combined payments. Also, the interest rate that you will be charged on your student loan consolidation is usually less than the average of your combined loans currently.
Maintaining Good Credit
Student loan debt consolidation is a great alternative method to rid yourself of your student loan obligation faster and more efficiently than the traditional payment structure. Perhaps the greatest benefit of student loan debt consolidation is that you are able to protect your valuable credit ranking. Your credit rating is important not only when you need to borrow money, open a line of credit, or get approved for a great credit card, but is also examined closely by potential employers, landlords, and others. Because of this having a bad credit rating due to not paying your student loans can cause you to be unable to get the job you have trained for or even rent a place to live.