As student loan debt soars past $1.5 trillion, the struggle of paying them back is real. A lot of former students are having to delay making major life decisions to pay back their loans. But others are taking a different approach. A new wave of young adults are becoming activists against what they call ‘student loan debt servitude’.
To protest the massively expensive cost of a college education, and their student loan bill, they’re simply deciding not to pay it. They are intentionally diving head first into default with no regrets. They use terms like “a student loan is economic terrorism” and crying out that these debts must be canceled immediately.
Their goal is political activism, and their outcry is understandable. The cost of a college education IS way too high. The problem is, this type of activism is doing nothing for their cause. In fact, it hurts them much more than it hurts the lenders. Banks and the federal government have plenty of money. They also have all the resources they need to make you suffer.
What Happens When Your Student Loan Goes into Default
Once you start missing student loan payments, your account is declared delinquent. After about 270 days of non-payment, you’re considered in default of your loan. That’s about 9 months late with your payments. The consequences of that are often quite severe. Going into default can stall your life financially and professionally. Here’s a list of situations that can happen:
• Delinquency reported to credit bureaus
• Your credit score will tank
• Send the loan to a collection agency
• Will garnish your pay
• You will no longer be entitled to deferments or file for forbearance
• Withhold your taxes
• You will not be eligible to receive more financial aid
• The lender can take you to court
• Revoke your professional license
• Interest will continue to pile on
• Add late fees
“Defaulting on any student loan can have very serious – and very guaranteed – negative consequences, including late fees, collections costs, credit damage, and collections efforts,” says student loan expert Adam Minsky.
Strategic Default Won’t Work on Federal Loans
To get their money back, private lenders have fewer options. They will have to take you to court to fight for their payments. Federal student loans, on the other hand, don’t need to follow that rule. The borrower has absolutely zero leverage against the government. That means they have more power to compel you to pay.
“Defaulting on a federal loan can be particularly dangerous because the government and Federal guarantors have a lot of power to pursue borrowers and take their money without needing to go through the court system,” said Minsky.
http://financialhelpers.com/4-facts-you-should-know-about-student-loan-forgiveness/
“Defaulting on Federal loans generally does not give borrowers leverage – their options are constrained by Federal law. And while it is possible to get out of default on Federal loans, going into default generally does not give people an advantage.”
It really makes no sense in the long run to torpedo your student loan and refuse to pay it. You’re only harming yourself, especially when there are programs available. There refinancing, income-driven payment plans, and student loan forgiveness.
If you have any questions about your loans and want to know more about these programs, give Financial Helpers a call. We’d love to help you sort out your loan situation. It’s better to pay them off the right way. Give us a call at:
At the end of the day, you borrowed the money. It’s your responsibility to pay it back. If you’re struggling, there are a variety of programs that can help you. Give us a call today.
