Think Before You Take Out That Loan
July 21st, 2006Pamela Yip writes in The Dallas Morning News about the challenges facing many student debt holders. It’s true that on average, students with a college degree earn much more over their lifetimes than high school diploma holders. On the other hand, there are situations where the job received is less rewarding than anticipated.
Many people take out student loans while they are young and first entering college. They may not see the actual risk of taking out a loan for such a large amount of money. These loans should be repaid promptly, and any default will cause personal and professional consequences.
Student loans are very different from other debts such as with a credit card. Students should financially plan like the adults they are to consider the negative effects of a college degree such as not getting the job they want, being underpaid, losing their job in a recession, and paycuts.
The article describes the uniqueness of a student loan with other consequences:
The Internal Revenue Service can seize your tax refund to pay your student loan. You can’t discharge your loan by filing for bankruptcy, and the federal government can garnishee your wages to pay the loan. That applies even in Texas, which has strict prohibitions against wage garnishment.
What’s more, professional licensing boards will deny you a license if you default on student loans.
If you think you’ll have trouble paying off your federally guaranteed student loan, contact your lender immediately to work something out. You don’t want to mess with Uncle Sam.
