 |
| Image Source |
On the matter of taking out student loans,
Don't do it. Just don't.
The exception is if you have a balance on your tuition and you need to buy books, borrow ONLY that amount and not a penny more.
 |
| Image Source |
It's tempting to max-out your loans and be flush with money during the semester. I did it. I borrowed every penny for which I was eligible. I didn't need the loans to pay my tuition or books; PELL and TAP took care of that. But the temptation was strong, and I did it anyway. I racked up a total of over $25,000 in student loans by the time I was done with graduate school.
What did I do with all that money? I bought a car, new clothes for me and my kids, bought Christmas presents, paid my rent, gave money to family and friends. It was SO great to get those big checks every semester!
Looking back, though, I really wish I hadn't. It took me over 15 years to pay it off.
FIFTEEN YEARS.
 |
| Image Source |
Do you want to be paying off loans that you didn't need for 15, 20 or 30 years?
When I made my monthly loan payments (which took a huge chunk out of my paycheck, by the way), I was essentially still paying for that apartment I no longer lived in, a car I no longer owned, a stereo I got rid of a long time ago, clothes I no longer wear, and money I loaned that was never paid back.
What a waste. What a HUGE mistake.
 |
| Image Source |
If you've even remotely thought that you can get away from just not paying them back, beware. If you default on your student loans, here's what will happen:
- The IRS will take all of your tax refunds until the loans are paid off (plus interest and collection fees)
- Your paycheck or wages will be garnished by the IRS
- If you collect Social Security or SSI, it will be garnished
- Your bank accounts can be frozen and drained by the government
- The federal government can sue you and you'll have to go to court
- You'll need to hire an attorney (BIG BUCKS)
- If you fail to appear for court, a warrant for your arrest will be created
- Don't believe me? Read about what happened to this guy.
- Your credit score will tank (Read here to understand why this matters.)
When people fall on difficult financial times, one solution is to declare bankruptcy. Since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, no student loan--private or federal--can be discharged (forgiven) in bankruptcy. The only exception? The person declaring bankruptcy must be able to prove that the debt repayment would cause "undue hardship," which is extremely difficulty to do except in case that the person is severely disabled.
There are alternatives to taking on student loan debt:
- Consider attending part-time and pay out-of-pocket whatever financial aid doesn't cover.
- Consider attending a community college where the education is equivalent to the first two years at any four-year school and the tuition is ridiculously low.
- Consider waiting until you've saved enough money to afford college without having to take out loans.
Resist the temptation.
PLEASE.
It will be hard to do now, but you will be SO glad later.
Trust me on this one.
(c) Robyn King. All Rights Reserved.
