June 3, 2009
Uh-Oh, I Can’t Repay My Student Loans
The parties are over, Thirsty Thursdays are a mere memory, and early morning wake-up calls have taken the place of 11:30 am classes. Life after college can be a bit jolting and the wretched specter of student loans don’t help to ease the transition, especially as a volatile economy has made the job search even more difficult for many recent graduates.
The realities of repaying student loans hit me harder than Mike Tyson after a deadbeat roommate forced me to cough up rent for a two bedroom apartment by my lonesome for a number of months. Needless to say, paying back my loans fell somewhere toward the bottom of my priority list. A reluctance to repay student loans was mirrored by some of my college compadres. While I chose to defer–or suspend–my loans for a year, some friends used the “out of sight, out of mindâ€ method.
Not surprisingly, our fiscal dilemmas are shared among students. Default rates for federally guaranteed student loans are expected to reach 6.9% for fiscal year 2007, up from 4.6% two years earlier, according the U.S. Department of Education. And over the past decade, the amount of debt students graduated with more than doubled from $9,250 to $19,200 for graduates, according to the Project on Student Debt, a student advocacy organization.
For graduates facing the daunting realities of coughing up that borrowed dough, check your options:
Call your lender. Many of us like to treat overdue bills like a bad rash–ignore it and it’ll go away–but much to our dismay, bills, especially student loans, don’t work that way. Contact your lender as soon as you get a whiff of repayment difficulty, says Mark Kantrowitz, publisher of FinAid.org, an online financial aid resource center. “You don’t want to default and then call, because you’ll lose some of your [repayment] options,â€ he adds. Remember, lenders can garnish wages, social security, and income tax refunds if you fail to repay your loans.