There can be serious consequences for any graduate who has defaulted on his or her student loan. Default can occur after about nine months of non-payment, as per federal loan requirements. This may sound like a long time to not pay. There are many reasons this may occur. Perhaps you are a graduate who can not afford to pay your student loans on top of maintaining a minimal standard of living. Many graduates must apply for entry-level positions before they can climb the ladder into higher-paying salaries. Perhaps you just ignored those student loans, hoping they would simply disappear (which will never happen). Or, perhaps, incriminating circumstances left you unable to pay.
There are options for many people facing defaulted student loans. However, many do not realize the options are there for them. Barbara was one of those people. She graduated with a bachelor’s degree in mathematics. She was hoping to become a highly-credited math teacher in the suburbs. She had always loved children, and she would never give up on her dreams of shaping young minds.
However, Barbara was forced to enter her career as a teacher’s aide, rather than a full-time teacher. This would work out for a couple of years, but bills were continually piling up, and it wouldn’t be long before collection agencies were calling her home, looking for the cash. Barbara’s student loans had been put by the wayside. She had hoped better times would be forthcoming, but this would not happen for a number of years.
Default occurred for Barbara, just as it has for many college graduates with high principles on their student loans. Barbara now faced administrative garnishment. Administrative garnishment is the process of the government seizing funds in order to pay for those defaulted student loans. The seizure can begin with wage garnishment. Under these circumstances, each of Barbara’s paychecks would have a percentage taken out by the government. With her situation as bad as it was, this would not end well. Of course, the government can only legally take up to 15% of a person’s wages, or only so much as to not cause undue hardship on said person. Undue financial hardship is hard to prove, however, and the minimal standards of living are very low. It could break a person to have even a little money taken out of their paychecks.
Administrative garnishment also comes in the form of tax seizures. The government can decide to garnish up to 100% of federal and even state tax refunds. This money is a highly-hoped for income for many people. The extra money can be used on any number of things, be it housing expenses, getting current on bills, or little emergencies that might have happened along the way. Without that money, people like Barbara face even greater hardship.
One way or another, those student loans need to be paid off. Administrative garnishment is one method the government will employ to get back the money they lent you. If you are facing circumstances such as Barbara, there are ways out. There are options available for graduates facing defaulted student loans, and there are those options available for people who haven’t defaulted quite yet, but want to prevent it. Check out other links on this webpage to get more information. Serious consequences are awaiting someone who defaults on a student loan. Don’t let it happen to you.