Oct
If you are a former college or graduate student with a large amount of federal loans, you are probably familiar with the stress that repaying those loans causes. It is a reality quite different than the prosperous hope that you were promised when you enrolled in those classes. The economy is no longer set up in a way where any college degree can get you into a gainful, secure job along the lines of the field that you wanted to join into. However, when student loans default those who signed up for them will find themselves in a new world of unpleasantness.
To default means to fail to make payments on the amount you took out. This process of repayment begins either six or nine months after you graduate from your school (depending on your program). This time period is intended to act as a buffer so that you have time to earn living money before your repayment begins. However, with unemployment of recent college grads at nine percent and underemployment at perhaps over fifty percent, this may not be enough.
When you fail to repay the first thing the government will do is quit sending you money, whether through federal or state tax returns. This, however, in almost every case won’t even cover a percent of what you owe. Then they may hand you over to a private collection agency (bad) at your own expense, begin garnishing your wages (aka, siphon your payments directly from your paycheck via your boss, slash your credit rating, and, finally, take legal action against you.
Ending up in prison would be an ironic and awful end to taking out your college loans. Even in a rough economy there are Opportunities and it is up to you to suck it up, flip some burgers, and make sure that your payments go out on time—or Uncle Sam might just get overly grump in your direction.
