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Behind On Student Loans? You Could Lose Your Right to Work


Dealing with loans is not funny, especially if it is related to student loans. You should pay student loans to stay away from problems. Most of the time, we fail to handle the situation when the loans keep increasing. Young people try to avoid extra expenses if they have student loans. What if you lose your job? Unfortunately,  losing your job does not wipe out your loans. On the contrary, they are getting a considerable hindrance in your career way. If losing a job is considered a meaningful problem, being in a student loan default is another heartbreaking situation. In this case, the most crucial question is what I should do if I cannot pay student loans?


Can I handle the situation without a job?

It is quite good to find a new job and begin to pay off your student loans, but most of the time, it is not so easy as it seems. So, take action and be aware of your situation before losing your right to work in your dream job. If you have a considerable problem with payments, then companies may ignore your application and you as a candidate. Keep in mind that student loans can impact your future career prospects.


What are the consequences of being in default?

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To be in default can cause huge problems. The government could distrain your wages or other benefits you owned. Creditors could also be another obstacle, as they might cease professional licenses if the student loan is in default. Just for info, we can say that in 19 states, the government gives a chance to loan providers to take action when borrowers cannot pay off their debts. As a result, for most of the people being without a license equals to losing the job.

Some states of the US government began using aggressive methods, like garnishing wages, putting liens on borrowers’ cars, houses or both. For example, states like Texas and Illinois use their power over professional licenses to make borrowers to repay student loans, while other regions, like Hawaii, Iowa, and Massachusetts try to avoid such kind of methods, as such kind of a policy does not work if the student or borrower cannot work and consequently, is not capable of paying the loan back.

If borrowers want to renew their license and go back to work, they should pay the required cost; unfortunately, the majority of young people are unable to repay student loans.

What should I do if I am behind on the student loans?


If you missed your payment, first of all, call your lender and inform him about the situation. Do not forget that being honest is essential in such kind of cases. When you stop making a payment without their knowledge, it can be a big problem in the future.

You can stay delinquent for three months, your loan provider will report about it to the three major credit bureaus, and if you make payments every month, it will be counted like three missed payments before they are reported to the credit line. Additionally, pay attention to the defaults. When you do not pay for eight months, your loans could go into defaults; the situation nobody wants to face. So, if you want to avoid additional problems and expenses, ask your lender to decrease or suspend your payments while you choose the best repayment program for yourself.


How to avoid going into default?

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In our previous articles, we have informed you about default. So what is a default?  When you have a problem with the payment, it can have a negative impact on your credit report. Regarding default, we can say that going into default is the worst one, as when you fail to pay student loans, it can turn into a huge problem in the future. When you are faced with default, it might be reported to the consumer reporting agencies which save reports for seven years.

To get rid of going into default, borrowers should make sure that they choose the right repayment plan. We should remind you that there are a lot of different repayment programs which are suitable for students who have financial problems. The income-based repayment program is one of these programs that are sponsored by the government. This option is based on your earnings. It means that if you could not earn any money, it relieves your payment burden. Additionally, there are some other types of programs which give a chance to the borrowers to pay student loans up to 25 years.

Moreover, the payments can either be fixed or graduated. Here, we advise you to calculate your loans and income before applying for any of these programs. Being systematic and organized might help you to pay off student loans as soon as possible.


The impact of deferment or forbearance on your loans

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If you want to benefit from deferment, it helps you to avoid payments on the principal or interest of your loans. During the student loan deferment, interest of some loans, like a Direct Subsidized Loan, Subsidized Federal Stafford Loan, or a Perkins Loan will be paid by the government. Moreover, be aware of interest rates. Because the interest will accrue on any other loan. You can benefit from deferring up to three years during a period of unemployment or underemployment.

Deferment is suitable for those whose daily expenses are higher than on average. A deferment allows you to keep your interest lower and at the same time, take over your costs.

Forbearance is similar to deferment, but there are some differences. If you choose forbearance as an option, then you can request a discretionary forbearance based on financial hardship. The period for forbearance is up to 12 months. You should keep in mind that during a forbearance you won’t repay student loans, but the interest will accrue. It means you will pay more than you did before forbearance.  

We recommended avoiding deferment and student loan forbearance as they are not a solution to student loans. If you could make any progress in your career life, then they occupy extra space for financial difficulty for the future.


What are the other options?


You can also benefit from career assistance programs that will be offered by your loan provider. There are also other options as loan refinancing or loan consolidation. SoFi is a refinancing program which suggests you employment assistance and career management counseling.

SoFi is another opportunity to refinance your student loans as soon as possible. The best side of this option is that SoFi offers you a low fixed interest rate and variable interest rate options. Another best side of this student loan refinancing program is that you get a 0.25 percent discounted rate. To get this discount you should sign up for Autopay. What you need to benefit from SoFi is to have a minimum of a 650 credit score. This credit score makes you qualified for refinancing.

Another option for refinancing your student loans is Earnest. This one also offers you low variable and fixed interest rate loan options. As in the case of SoFi, Earnest provides the same amount percent rate, and it consists of a 0.25 percent interest rate, the discount for using autopay. Once you find a job, inform your lender to pay student loans. It helps you take over your payments. So, be positive and believe in yourself.