Federal student loans offer certain benefits if they are directly made to students. Students are required to make no payments when they are in half time status. Being a student, you need not pay immediately. However, if you drop below half time status, your account will undergo the grace period that consists of the next six months. If you re-enroll in half time status, payments for the loan will be deferred. But, if you drop below half time status, you will no longer be offered the grace period. Federal student loans can be directly made to parents as well, but with a different payment plan. In case of parents, the loan payment is immediate. The volume of private student loans swells up with accumulation of interest where as the interest on Federal student loans, is deferred.
If your student loan goes defaulted and you need relief, you will lose the right to deferments and forbearances. You will have to suffer the consequences of your defaulted student loan. Moreover, you may not be offered any additional Federal student aid. You cannot have escape from the brunt of your student debt unless you make payments for at least 6 consecutive months. If the student loan that you have borrowed is declared in default, the following are the consequences –
• The case of your defaulted student loan may be handed over to a collection agency
•The collection agency will be entrusted with a responsibility to collect the defaulted student loan
• You will be charged the cost associated with the collection of your student loan
• You will be liable to pay court costs and attorney fees other than collection fees
• You can be dragged to court in case of your defaulted student loan
• The amount that your wages is garnished with may be limited by Federal law
• Your may face the interception of your state and federal income tax refunds
• Part of your Social Security benefit payments may be withheld by the Federal government
• The defaulted student loan will negatively affect your credit record and make you suffer its detrimental effects
• You will find it difficult to obtain a mortgage loan, an auto loan and even credit cards
• You will be denied deferments, federal interest benefits and renewal of your professional license
You will be moved from the frying pan to fire, when the collection agency will begin haunting you like hounds. The situation becomes worse, when you fall prey to their unfair debt collection practices. They will trouble you making frequent calls now and then. They are very likely to publicize your defaulted loan status that will in turn, make you suffer disgrace on your social reputation and feel embarrassed among your neighbors, friends and relatives. Sometimes, their approaches for debt collection go far to be abusive and offensive. The collector not only violates the Fair Debt Collection Practices Act but also your consumer rights to be treated fairly. Contact us and we will protect you by means of legal support from the embarrassment and harassment in the hands of the debt collector.