The Problem of Unpaid Student Loans

Most governments recognize the importance of post-secondary education, not only for the students who work so hard to graduate from college or university, but also for the welfare of the country itself. An educated population is a valuable asset for any nation, as it ensures growth, prosperity, and stability. It is for this reason that governments are willing to provide financial assistance to students who are capable and willing to undertake post-secondary studies.

Many students take advantage of government loans out of necessity or for convenience. With substantial loans, they are able to complete their studies without the worry of a financial burden, knowing that when they graduate and find employment, they can then make arrangements for repaying the loan. Most students have every intention of paying off their debt as soon as possible after graduation. Unfortunately, however, many find that their plans do not materialize in the way they had predicted, and a number of unforeseen circumstances can prevent them from doing so.

One of the most common roadblocks facing graduating students is the time needed to find employment quickly after graduation. Some are fortunate to be called for an early interview that leads to the start of a new career, but many others need as long as six months or more to find the employment they are seeking. This can seriously affect their ability to make payments on their student loans.

Some graduates find employment with promising prospects, but their lack of experience means low income to begin with. Again, newly-employed graduates in this position can have difficulty establishing a loan-payment schedule. Government student loans usually contain a flexibility clause allowing repayments to begin six months after graduation, but in many cases this is insufficient, and other solutions must be found.

New graduates, whether employed or not, need to be cautious in managing their finances, and most have to find ways of reducing day-to-day living expenses. This may involve a temporary extension of their living arrangements close to the college campus, sharing with a colleague, or even boarding with parents until permanent employment can be found. If loan payments are still an untenable financial burden, some government-sponsored solutions are available.

The repayment terms of student loans sponsored by the government, like the Federal Stafford Loans, for example, can be modified in the case of difficult or unusual circumstances. Graduates who have not found employment, and have not yet begun to repay the loan may apply for deferment. If granted, repayment would not be required until circumstances were more favorable. This would be a minimum of six months, but it could be up to two years longer.

Graduates, who have already begun to make payments, but cannot continue to do so because of financial difficulty, may apply for forbearance. This would allow them to stop making payments for a specified period of time.

As there are several sources from which students may obtain special loans, it is not unusual to find students who have obtained funds from more than one source. This can add to the burden of repayment, and students in this position should consider making arrangements for a consolidated loan. This would certainly reduce the amount needed each month, and it would make repayment more manageable. The U.S Department of Education can make arrangements for this under the Income Contingent Repayment Plan.

Most graduating students are anxious to eliminate their debts as they begin a new life in the world of work. They should consider one of the many financial plans that have been designed to help them do so.

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