It’s not a good idea to ignore your finances as it may lead to crazy fees and penalties. Students usually don’t realize it at once, but over the years, they will have to learn it the hard way. In this article, you will learn about what may happen if you’ve ignored your student loans, and actions you need to take immediately.
It can be really tempting to forget about loan monthly statements and let them get lost in your email inbox or among other bills. However, you should bear in mind that not paying your student loans can have long-term harmful effects on your credit as well as on your monthly paychecks.
Don’t count on student loan debt forgiveness. It’s better to take immediate action than to be overwhelmed by the consequences and continue to procrastinate.
Missing One Monthly Payment
Did you know that the day after you’ve missed your monthly payment, your student loan is considered uncleared or delinquent? Even if it happened, you can still avoid late penalties and fees if you repay it within 2 weeks of the due date.
However, it may depend on the type of your loan and its terms, so make sure you check you student loan debt statistics.
Your lender may have contacted you several times asking you to repay the loan, which means you are more than 30 days late on your payment. And if you are over 1.5 months late, be ready that your credit score may be affected because your lender has already reported you to the credit bureaus.
Student Loan Burden Forbearance or Deferment
Of course, it’s better to pay off your student loan the sooner the better.In case you really can’t repay your monthly payment and you are currently in student loan debt crisis, you can apply for student loan burden forbearance or deferment.Click To Tweet
Both of these options are federal student loan programs, and there are certain similarities and differences between them.
These two programs allow you to stop making payments for a particular period of time. If you are thinking about it and not sure which program to choose, it’s better to opt for deferment. Under deferment, the interest won’t accrue while your student loan payments are postponed. On the contrary, the interest will continue to pile up if you choose forbearance.
Each of these programs can be granted in case you are experiencing serious illness or any type of financial hardship.
Missing Your Loan Payments for Months
If your student loan situation is even worse and you have ignored your payments for several months, you will have to do more work in order to minimize the long-term damage to your credit. Your possible options will depend on how many monthly payments you have missed and when was your last payment.
If you are late over 270 days, your loan acquires default status. It means that your lender has turned over your loan to a collections agency. When your loan is in default, it can seriously harm your credit and you may become ineligible for any possible student loans in the future. The best tip here is to pay the full amount of the loan plus all additional fees.
In the end, if you don’t want your student loan debt bubble to burst, make sure you don’t ignore your loan. Ignoring the payments will get you into trouble, because the longer you wait, the fewer options you will have to get clear of your debt.