Posted on Monday, 14th December 2009 by admin
Unless you are looking to ruin your life forever, the thing you want to do is to avoid defaulting on your student loans. The question is why would you want to default on your student loan when there are other options? The following is information on the best solution for avoiding student loan default.
Should I Default On My Student Loan?
Bad idea! Don’t even think about it! Defaulting on your student loan is the scariest financial situation you could ever want to be in. It is worse than foreclosure and receiving that scary IRS letter. And if you think it can’t be that bad, think again! According to Mark Kantrowitz, the founder of FinAid.org, “If education debt is evil, then defaulting on your student loans is a one-way ticket to hell.” Borrowers who get into trouble Kantrowitz added “are stuck in an oppressive house of horror with no way out.” Ouch!
Okay, so the big question is, how does one become a defaulter on their student loan? Well, if you fail to make payments for nine months or if you fail to meet other terms of the student loan contract continuous for nine months you are in default of your loan. Once you are in default of your loan the entire balance becomes immediately due.
When Does A Delinquency Period Begin?
A delinquency period begins on the very first day after your missed payment. During the first 15 days of being delinquent, you will receive a written notice or collection letter from your loan holder, in addition to notices explaining what will happen if you continue to be delinquent. Your loan holder will declare you in default if your delinquency goes on for nine months. It is best to contact your lender immediately to see what alternative repayment options are available.
5 Steps to Avoid Defaulting On Your Student Loan
Borrow only what you need and nothing more. Over-borrowing can get you deeper into debt. While you are in school live like a broke student-try not to spend too much. Understand your obligations and responsibilities before signing your contract and taking out a loan. Know when your payments are due and make your student loan payments on time. Notify your lenders if you graduate, quit school, have financial difficulties or change address. The failure to receive a monthly statement does not relieve you of your responsibilities and obligations to your student loan repayment. So don’t even think about doing that!
Tips for Dealing with Your Loan Holder*
It is usually best to communicate with your loan servicer in writing because you will have a physical record of what has been said and done.
Keep a Record of Events. If you speak with someone on the phone, make a note of whom you speak to, when, and what was said. If you use the mail, keep a copy of your letter and of any replies you receive.
Keep the Evidence. Keep the originals of all receipts, bills, letters and e-mails regarding your account. Provide copies of the originals if you are asked for them. Send letters via certified mail, with a return receipt requested.
Stay Calm. If you are confronted by someone directly, don’t let the emotion of the moment get to you. If you are clearly not getting an adequate response, simply take the next step in the procedure for resolving your problems yourself.
Write Clearly and Concisely. Be polite and courteous, but don’t be afraid to convey the detail of any incident and to articulate your concerns. Write down the facts in a logical order and stick to what is relevant. Remember to include important details like your account number or social security number. Put these details at the top of your letter.
Agree on a Reasonable Time to Expect a Response. Ask for a response in a reasonable time, and be sure to tell the person how you can be reached.
*From the Federal Student Aid Ombudsman of the Department of Education
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