College debt can be overwhelming for Greensboro consumers
Image Source: Flickr User GotCredit
Greensboro consumers with student loans should know that educational loan default is on the rise. In North Carolina, the borrower default rate is close to 13%. The US Department of Education recently reported that for the first time in four years, defaults on new student loans are rising. As of now, more than 8.5 million student loan borrowers are in default. Although our state isn’t the worst, it’s not the best either. New Mexico has the worst rate at more than 18% while North Dakota has the lowest rate of default with just 6.4%. NC falls in the middle. If you’re a borrower behind on your school debt, here’s what you need to know.
Which Borrowers Are More Likely to Default?
If you attended a for-profit school, according to Consumer Affairs.com, you’re likely to wind up in default of this debt. A third of defaulters went to these often-pricier schools. Also, if you didn’t graduate, you’re statistically more likely to wind up with bad school debt. The average default rate across the country is 11.5%, and North Carolina is worse off than average. Are you a Greensboro borrower that’s fallen behind on your school debt? Those that attended private schools have a lower default rate followed by public schools and finally, by for-profit schools.
Student Loan Delinquency Versus Default
If you run late on one payment or a few, you’re considered delinquent on your student debt. To be in default, you must let this situation churn on until you’re nine months behind on your payments. Once in default, the consequences can be dire. Student loan services and their debt collection arms have mighty powers to make your life miserable. They can garnish your wages, sue for a lien on your home or other assets, and take your income tax returns (state and federal both). If your debt continues unpaid into your golden years, they can garnish your Social Security payments.
Federal Student Loans Last Forever
One thing to remember, for Greensboro consumers hoping their student debts will evaporate over time, is that there is no expiration date or statute of limitations on federal student loans. Private student loans are like other debt such as credit cards or medical bills. But federal student loans are limitless with great powers of enforcement. To make matters worse, in recent years, federal loan debt collectors have begun to sue student loan debtors that are also homeowners to attach liens to their homes. For many, this can be life-changing, and not for the better.
Be Careful with Student Loan Refi Offers
For Greensboro student loan debtors behind on their education debt, there are options. First, you can seek a lower payment plan. Income-sensitive repayment plans can drastically reduce your installments while also allowing you longer to deal with your debt. However, in the long-run, you’ll pay more interest. Another upside to an income-sensitive plan is that after 20-25 years of payments, if you still owe a balance, it can be discharged, although the amount discharged is treated as taxable income. Second, you can ask for deferment or forbearance, both of which temporarily suspend payments on your loan. Third, you can refinance your debt.
If you refinance with a private loan, you lose the protections, such as income-based repayment, that came with owing the federal government. However, you also will enjoy the benefit of now having a statute of limitations on your debt since it’s no longer under the federal law that keeps school debt evergreen. There’s also the option of consolidation which lumps all your federal loans into one large loan. You can only do this once in the life of your loans, but it can pull you out of default. There are also benefits for student loan borrowers, behind on their debt, that file for bankruptcy.
To find out more about student loans and bankruptcy, contact the Law Offices of John T. Orcutt. Read reviews from our clients and then call +1-919-646-2654 today for a free Greensboro bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.