According to the Project on Student Debt, “College seniors who graduated in 2008 carried an average of $23,200 in student loan debt. Meanwhile, unemployment climbed from an already challenging 7.6 percent in the third quarter of 2008 to 10.6 percent in 2009 – the highest third-quarter rate for college graduates aged 20 to 24 this decade. Debt levels vary widely by state, with some Midwestern and New England states facing the highest debts.”
Higher student loan debts and higher unemployment, means a record number of college students defaulting on their student loans. The default rate is almost 7 percent—twice what it was in 2006. According to NPR, “About a quarter of a million people who were supposed to start paying their student loans in 2007 still are not.”
With no jobs and no job prospects, recent graduates are taking whatever they can get. They’re working as temps, waiters, in retail, and even fast food. They are barely making enough to get by, and no where near enough to pay off their student loans.
What happens if you default on your student loan?
You can be:
- turned over to a collection agency
- your credit score goes down
- the government can garnish your wages
- Social Security can be withheld
Get help to pay off student loans
The Income-Based Repayment Plan is a program that borrowers can sign up for that will limit their student loan payments to 15 percent of their incomes. A three-year deferment is also possible if graduates can prove they are hardship cases.
Even if you do get a deferment, chances are you’re going to have to pay it back at some point. Even if you defer for a few years the time will come when your loans comes due. The federal government guarantees most student loans and over a third of American students take one. Therefore, federal law makes it really had to discharge a student loan debt. That means, you can’t get out of paying it through declaring bankruptcy.
Luckily, there are many services to help you manage your money. PayOff Live is a web-based application that determines how you can pay off your debts quickly—often in less than half the time. You save money by paying less interest. As long as you’re make more money than you’re spending, you can use PayOff Live to become debt free—without major changes to your lifestyle, refinancing or lines of credit.
Facing large student loan debts can be frightening. PayOff Live can offer you personalized direction and step-by-step instructions that you can follow to pay off your student loans in less than half the time.