Tuesday, June 05, 2007

If You Default On Your Student Loan It Can Cause Problems With Your Credit Rating

If you default on your student loan it can cause problems with your credit rating. There are serious implications when you default on your student loan as it can affect your wages and possible tax refunds in addition to a poor credit rating. You can avoid defaulted student loans by following a few simple steps. You can avoid defaulting on your student loan if you just stay in contact with the lender.

Defaulting on your loan is almost impossible once you have made your situation known to your lenders. I too had financial problems keeping up with the payments on loans I had acquired whilst a student. A friend of mine made a smart remark about the lenders suggesting that they can't repossess an education. If you take this approach you will definitely have a problem and default on your student loan.

There isn't usually a problem if you get in touch with your lender. I shouldn't have worried; getting a temporary suspension wasn't a problem. I talked with a helpful representative who took me through the steps to deferring the debt until I was able to make payments again.

The weight just dropped off my shoulders when the loan was suspended until a time when I could restart payments and all this happened with a week. Although defaulting on my student loan wasn't what I wanted, I knew that other financial institutions would not be quite as accommodating. I wish all my creditors had been as helpful as the student loan provider.

Although a deferment is a useful facility, interest is still being added on whilst the loan is suspended which means in the long term you will pay more. Despite the additional cost it is preferable to a defaulted student loan. In many cases it is possible to make small partial payments to the lender.

s18] It is worth checking with you bank to see if they will agree to accept interest only payments on a loan for a temporary period. The fact that the loan will not shrink during this time is a small price to pay to avoid a defaulted student loan.

For many students this type of financial arrangement enables them to complete their education and is a necessity. If too many people have defaulted student loans, the money is not available for new students. You should never jus sit back and ignore the problem when your finance company can help you.

Alternative payment arrangements or a deferment on the loan are just two alternatives to avoid a poor credit record. This sort of action has other benefits in that the money available for new students is less likely to dry up.

1 comment:

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