What Happens If You Never Pay Your Student Loans
If you are like millions of other college graduates, you are probably wondering what happens if you never pay your student loans. You may be concerned that once you leave college, you’ll have a mountain of student loan debt to overcome. And you probably also wonder what happens when you apply for student loan forgiveness. There are a few things you need to know about student loan forgiveness.
So what happens if you never pay your student loans? Your federal student loan is not discharged unless you go to bankruptcy or become completely disabled. But most students don’t see it this way. They believe they will be able to work their way out of student loan debt with minimal difficulty. That’s simply not true. And unless you go to the extreme of declaring bankruptcy, your student loan debts will stay with you.
To qualify for student loan forgiveness, you need to demonstrate extreme hardship. For most student loans, this means you must be enrolled full-time at an accredited college or university. You also need to show that your income has dropped significantly, resulting in you not being able to reasonably pay your student loan debt. To receive student loan forgiveness, you must also prove that you’ve tried to save for at least six months but have been unable to save enough money to make ends meet. These requirements can seem strict, but in many cases, if you are able to show you are going through a serious financial hardship, you can get student loans dismissed.
As you can imagine, this can make paying off student loans very difficult. So what happens if you never pay your student loans? The answer is obvious – the government will garnish your salary, sale your assets, sell your vehicle and essentially lock you out of your home and family. This will not just affect you directly, but will also affect your credit. If you don’t take steps to pay back your student loans, the IRS can file criminal charges against you to try and recoup the debt.
The best way to avoid what happens if you never pay your student loans is to stop repaying any loans prior to graduation. There may be some exceptions, but this is the general rule. After you graduate and find yourself jobless, it’s nearly impossible to get another student loan. But while unemployed, you can easily rack up a series of late payments and penalties and end up owing student loan debt twice as much as when you started school.
Another question often asked is what happens if you are laid off or suffer other kind of income loss. You may have noticed that your loans are becoming more difficult to repay. As an unemployed student, you will probably qualify for unemployment compensation. However, what happens if you don’t receive unemployment compensation and instead are forced into supplemental unemployment? Your student loans could end up being the reason why you can’t make these extra payments.
It is important to remember that all federal student loan programs are backed by the U.S. government. If you are unable to pay your student loan obligations, you should definitely contact your lender immediately and see what your options are. If you are able to meet the requirements to re-apply for a loan with the same lender (which means you no longer owe them the money you borrowed in the first place), you can qualify for a new loan and avoid what happens if you never pay your student loan obligations. You may also qualify for lower interest rates, reduced fees and charges and forgiveness of past due balances.
As a last resort, you could file bankruptcy or attempt to have a garnishment placed on your wages. These actions would be illegal and affect your ability to receive any type of financial assistance from the federal government, student loans included. It is best to weigh your options carefully before making any drastic decisions that could have long lasting effects on your finances. Luckily, you have professional sources that can help answer any questions you may have regarding what happens if you never pay your student loans.