School loan default – avoid it anyhow
The school loan default percentage is growing over the years instead of decreasing. A school loan default means that the student’s credit rating report is getting the damage which will eventually stop the student from getting any further loans in future life, or even if she or he does manage to get a loan it will be an extremely difficult process. Even after knowing all this facts, if a student is defaulting on their school loan at the very beginning of their career as well as life, it means that there must be some serious problem that is the reason behind the growth of school loan default over the years.
The very first and the biggest reason is unemployment. Students are not getting a job after completing their education and hence are not being able to pay back their school loans along with the interest. To stop school loan default, the government has to create enough employment. Then again over the loan there are interests making the sum even bigger with the result being growing school loan default. Providing subsidy to students is another way by which the government can at least decrease the rate of student loan default.
The school loan offered by the government to students is known as the Stafford loan. This kind of loan is specifically meant for students who are going for their post secondary studies or first under graduate education. It can be broadly classified in to two categories the subsidized Stafford loan and the unsubsidized Stafford loan. In the subsidized Stafford loan category, the government provides subsidy on the interest on the loan as long as the student is pursuing their education. And in the unsubsidized Stafford loan category there is no subsidy but this much is allowed that the student can let the interest accumulate in their loan account such that they do not have to pay while they are pursuing their education.
If indeed there is a chance of school loan default, you can talk it out with the concerned authority to find out a solution, if any, like if the period of time for repayment can be increased or so on. One solution that can be taken is loan consolidation. If you have school loan along with other loans, instead of trying to pay back each one, consolidate the loans to make a single payment each month.
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