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4 Reasons to Pay Off Your Student Loans

Most of us remember college as some of the best years of our lives. However, those years didn’t come cheap. If you’re like the vast majority of people, you graduated with a degree and a lot of debt to go with it. Unfortunately, many also find themselves in situations where they begin missing their payments or even considering if it’s worth defaulting on this loan. Here are four reasons you absolutely do not want to do this.

Your Credit Score Will Take a Massive Hit
Defaulting on your student loans is not something to take lightly if for no other reason than because of the crater it will put in your credit score. It could be just as bad as defaulting on a car loan or even your mortgage. After that, you not only have to worry about your student debt, but also how you’ll ever be able to improve your credit score – two very serious problems.

Your Wages Could Be Garnished
This is another good example of how not paying your student loans will just make things much, much worse. If you have federal loans and decide to quit paying the government back, it’s not like Uncle Sam is light on options. The government can actually demand that your employer garnishes your wages to pay them back. You could easily lose as much as 15% from each paycheck.

Don’t think you’re safe if you went through a private lender either. While they’d have to go through the courts first, this same option is available to them.

You Could Lose Your Tax Refund
No one likes filing their taxes each year, but when that return comes, it’s time to celebrate. If you don’t pay your student loans, the Department of the Treasury may receive word that your federal and state refund must be used to cover your debt.

If you and your spouse file jointly, both of your individual tax refunds can be used to cover student debts incurred by just one of you.

Your Employment Opportunities Could Diminish
It’s become popular for many employers to run credit checks on applicants before hiring them as a way of gaining some insight into how responsible they are. As we mentioned above, your credit score will take a thrashing if you decide not to pay your student loans, so jobs that require these checks will most likely be out of reach.

You may already have a job, though. Aside from getting your wages garnished, you could have a professional license stripped because of not paying back your loans. This is legal in over 20 states. Without your license, you may not be able to work in your chosen profession at all, meaning now you need a new job.

Student debt is almost impossible to discharge, so don’t give into the thinking that you’ll simply file bankruptcy to help get out from under it. Instead, accept the reality for what it is: you need to take steps to pay off this debt because the above four consequences we just covered are too painful to endure.

Author - Matthew

Writer & researcher -

With 8 years of experience Matthew Miller has written financial content and guided Internet visitors to the right financial products. With a board contact network of experts Matthew creates authoritative guides and advice articles. Read more »

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