Of all the debts you will ever take, perhaps the one most beneficial for your well-being is the student loan. With a variety of lenders offering loans to students for their studies, studying at a good institution will no longer depend on your family's finances but your ability to pay off the loan once you graduate and start working. Although loan repayment terms are considerably flexible as compared to other kinds of debt, such as starting repayments around six months after graduation, ensure that you repay as per schedule. If you don't, even for one installment, you will be tagged delinquent and marked a defaulter if you continue missing payments. Some of the consequences of being marked a defaulter are:
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1. Your credit report will be adversely affected. This will make you ineligible for credit cards, car loans and any form of financial assistance.
2. Your wages may be held back, up to a maximum of 10%.
3. You may not be employed by any government agency.
4. Your income tax refunds may be held back to repay the loan.
Student loans cannot be discharged through bankruptcy, and its quite difficult to satisfy the requirements for an undue hardship petition for which loan repayment is waived. You will have to demonstrate your willingness to pay but inability to do so, and that these mitigating circumstances that prevent loan repayment will persist the entire tenure of the loan. Therefore, you should take a student loan knowing fully well that you will have to pay it back, and be clear about the implications and obligations associated with it. At the same time, the following tips may help you stave off student loan defaults:
1. You should borrow enough to meet your educational and living expenses, not enough to furnish a lavish, partying lifestyle.
2. You should be knowledgeable about the terms and conditions, such as when your first installment is due. Keep your latest contact details updated with the lender so that you receive all updates.
3. You should negotiate terms so that the monthly payments are affordable, even if you don't get your dream job.
4. You can explore loan forgiveness programs if you intend to work in the military or non-profit sector after graduation.
5. You should talk with the lender for temporary forbearance or deferment options if you find repayments difficult. However, keep in mind that interest ay continue to accrue for any deferment.
6. You can opt for loan consolidation programs to combine multiple student loans into one single loan. This make repayment easier.
If you feel that further education can add value to your profile and further your career, and the only obstacle is money, you should definitely opt for a student loan. After all, the lifelong benefits you will get from such education will far outweigh the temporary difficulties of taking on this debt. Also, a student loan and its repayment helps build your credit history and can also save you taxes once you start earning after your studies. In conclusion, a student loan is one of the best options available to you today to ensure a better tomorrow.
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