What Happens If You Don’t Get Your Student Loans Back and You Just Say Fuck It
Student loans are strangling an entire generation of Americans. For decades, people have been encouraged to prioritize higher education, and one of the most effective incentives has been the relatively simple process of obtaining a loan for tuition and living expenses while you were earning your degree. I remember applying to college and was completely amazed when I received my financial aid package – it seemed incredible that the government was ready to give me, a famous 18-year-old idiot, all this money.
And to be honest, it was incredible. Giving loans to children like me directly led to the current situation: 45 million people in this country have a total debt of $ 1.7 trillion (this is an average debt of about $ 38,000). The crisis was triggered by a variety of factors, including the ease of obtaining a loan, students borrowing the maximum amounts they are approved for, not just what they really need, and a lack of understanding of the repayment process … also, a clear need for a loan to achieve American the dream they were promised will come with higher education and hard work.
The point is that an increasing number of student loan recipients will pay off their loans for the rest of their lives . And President Biden’s cancellation of some or all of the student loan debt is becoming increasingly unlikely , which may lead you to wonder what would happen if you just … ignored them. What happens if you just stop paying and start living your life? How long will student loans be a part of your life?
The short answer is forever. Until you die. In some cases, after death. Longer answer: it’s hard.
Things to Consider If You Want to Ignore Your Student Loans
Here are some things to consider if you are thinking of just saying “go to hell” and walk away from your student loan debt:
Credit reports
Your student loans are, you know, loans , which is why they are listed on your credit report and affect your credit score. And they will stay there for seven years after your original offense (the fact that we use this word to refer to dire financial circumstances tells you a lot about capitalism). You probably won’t be able to remove a loan from your credit report unless there are major inaccuracies in it, so a delayed loan will make your credit rating appear average, affecting your ability to get other loans, find a job, rent an apartment, and generally do everything that requires money.
After seven years, the loan can be removed from your credit report, but its negative effects will persist for a while – but the further in the past the loan sags, the less impact it will have on your credit.
There is one important exception: if your loan is known as a Perkins loan , it is not removed from your credit report until it is repaid, no exceptions. However, in 2017 they stopped offering this need-based loan, so if your student loan debt is relatively recent, you probably don’t have it.
Bankruptcy
Generally, you cannot pay off student loans during bankruptcy, so even if you are ready to blow up your financial life, you will still probably have to deal with these loans.
Forgiveness
There are several ways to forgive your federal student loans. The Government Service Loan Forgiveness program will cancel your loans after 10 years in a government or related nonprofit organization with monthly payments. The main thing is to keep these monthly payments as low as possible so that you get the maximum benefit.
There are also several payment income-focused plans that you can sign up to that will qualify you for loan forgiveness after 20-25 years, even if you haven’t paid the full amount … what, hurray? You can also get a loan repayment if you meet the criteria for 100 percent disability or if you are a teacher and are eligible for teacher loan forgiveness . But that’s all.
How ignoring student loans will affect your future
Let’s say you’re ready to take a credit hit, and you’re not worried about the government going after you for money. You stop paying, ignore all the problems, and spend extra money on the purchase of exquisite luxury items such as food and lodging. What happens in the long run?
First of all, keep in mind that removing your loans from your credit report does not mean that you are no longer responsible for them . They will stay with you forever unless you pay them or fire them through a forgiveness program. Even if your loan has disappeared from your credit report, collection agencies may still bother you to pay it back, and if they fail, the federal government may step in to try to get it, which can be very frustrating. The government can do things that collection agencies cannot, such as confiscate your tax refunds and collect your salaries, and you cannot do much to stop them.
Federal student loans also accompany you until retirement. Even if you remove them from your credit report after seven years and work your entire life, after you reach retirement age and start receiving Social Security, you will still be responsible for your loans and the federal government could still come. to you for them. …
And some student loans can take you to your grave – and beyond. If you had a co-ruler (say, a parent) and died before his death, they may be responsible for balance no matter how much time has passed.
Bottom line
You can say “fuck it” and ditch the student loan, but not without consequences. After seven years, you can erase those bad debts from your credit report, which will relieve some of the pressure, but the specter that the government will sue and possibly withhold your paycheck will never disappear. So, essentially, we might have to revisit the old adage about death and taxes and add something about student loan debt because the government will keep trying.