You know all the reasons education is the answer to your future success and why it’s worth the investment. But paying off the student loans that funded your education can be challenging at times. If you’re thinking of making a late payment or even skipping a payment, STOP. Here are 6 reasons NOT to default on your student loan:
Debt collectors are aggressive. With more than 1 trillion dollars in outstanding student debt,1 debt collectors have a huge financial incentive to go after delinquent accounts, and go after them aggressively. They may call you—repeatedly—and become a nuisance and embarrassment to you. Although there are laws against abusive tactics, the National Consumer Law Center acknowledges that “money, not the law, drives collection agency behavior.”2
It will cost you more in the long-run. Skipping or making late payments will result in additional fees and penalties that can add up quickly. If you fully default and stop making payments altogether, those costs can skyrocket. Eventually you’ll have to pay the original note, inflated interest, penalties, and even legal costs if you let it go that far.
Student loans don’t go away. Unlike many financial obligations that can be wiped out if you declare bankruptcy, student loans must be repaid. Only in extreme hardship cases will your loans be forgiven in the event of a Chapter 7 filing.
Your wages can be garnished. What that means is that if you default on your student loan, the lender can go directly to your employer and have money taken from your paycheck every week! Wage garnishment will continue until you repay the loan or renegotiate the terms of your note.
Student default will harm your credit score. A single missed payment labels you as “delinquent” but when your payment becomes 90 days past due, your account will be reported to the three major credit bureaus with a negative mark on your credit score.
It can impact your ability to get a job. Credit checks have become routine for some employers doing background checks on potential employees. Do you think you’ll get hired if they see a poor credit score and a disregard for your financial obligations?
At Charter College, we want you to be successful in and out of the classroom and we know being financially responsible can help you meet your goals for success. Finding a career you love is another way! We offer career-focused programs in accounting, business, criminal justice, healthcare, nursing, information technology, paralegal studies, and the trades. If you’re ready to change your life, start here.