Student Debt and Its Implications - Essay Example

Download file to see previous pages... Many students engaged in borrowing as well as in huge sums of money. During graduation, the average debt in 2008 rose by six percent in the following year heating $24,000. In the year 2008, there was the highest number of defaulters in federal loan repayment in over a decade. This was when the nation’s economy slid into recession. Partly driven by the slow economy, federal loan defaulters are increasing.
If a student fails to make payments for 270 days, it becomes a matter of increasing significance to both community colleges as well as the students. Loan default brings about severe consequences to the borrowers as well as colleges. When one misses some payments he/she could be demanded to play through calls and letters. However, defaulting can destroy a student’s future. Federal agents will demand that a defaulter pays the loan in full. In addition, the case may be assigned to some collection agency. A defaulter’s wages, as well as benefits, could be garnished till the balance (that may not be easy to discharge in bankruptcy) gets resolved. This may apply even to old age social security benefits being garnished (Clark, 499).
Loan defaults for borrowers could wreck their credit, create the inability to buy a home or car, finding employment or even renting a home. Colleges, where only a few students get to borrow, have special protections, however, colleges could result to being not eligible to federal loans as well as grants where most of the colleges’ former borrowers default within a given period of 3 years’ time for entering payment (Bryce, Matthew and Debbie, 1).
With federal loans as well as the grand plus loans, it is at a time when this loan is twenty-one to thirty days late that the loan can go to delinquency but the national credit bureaus may be informed when a loan is 60 days late. However, the program of federal loans provides a number of plans to that held defaulters.
But one has to negotiate with their lender in the case for private loans which involve agreement terms of the loan as well as options for payment.   ...Download file to see next pagesRead More