Understanding Student Loan Default and Repayment Strategies
Exploring the consequences of defaulting on student loans, the importance of timely repayment, and the potential options for managing student loan debt. The article delves into the processes of loan default, implications of non-repayment, and considerations for avoiding financial pitfalls associated with student loans. Insights on discharge through bankruptcy and the significance of financial planning are also discussed.
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MATH 201 QUANTITATIVE REASONING PROJECT NICOLE THOMAS BRYANT & STRATTON COLLEGE MATH 201 MR. ROGER MCKAY APRIL 19, 2020
ABSTRACT In this report I will explain student loan debt and how I plan to repay the student loan on my budget. I ve accumulated a student loan debt to assist in covering tuition costs to complete the education needed in order to ascertain the career that I have long awaited to pursue. This report is intended to explain how I am afforded to pay down the student loan debt and how to remain debt free provided the income reported in this report. I will reveal my plan repay student loans and manage debt so that I ll stay on track with finances and afforded to save for retirement. I chose this field of study because I feel that I can guide individuals to get on track with their lives and living a day by day meaningful life. The salary earned on this field is well deserving and afforded to initiate payment on loans upon graduation, as well as conduct a meaningful lifestyle.
WHAT HAPPENS IF YOU DEFAULT ON A STUDENT LOAN? If you ve defaulted on your student loan, that means you ve failed to repay your loans as agreed. That could involve several things: You ve gone too long without making a payment, you ve violated terms and conditions of the loan or you fraudulently obtained a student loan. Defaulting on student loans can lead to collections process. Collections can sometimes involve the courts and legal proceedings. Failing to comply with such proceedings, such as not showing up to court, can get you arrested. This is called contempt of court. We don t want that. So, if you default on your loan, you can t just ignore it after the fact. Which is why it s important to understand what happens when you default on a student loan so you can take appropriate actions.
WHAT IT MEANS TO DEFAULT ON A STUDENT LOAN? If you ve defaulted on your student loan, that means you ve failed to repay your loans as agreed. That could involve several things: You ve gone too long without making a payment You ve violated terms and conditions of the loan Defaulting on a federal student loan can come with even heftier consequences. This is in part because the government provides so many options for paying back student loans that it sees default as an extremely serious issue.
Can Student Loans be discharged through bankruptcy? Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt will impose an undue hardship on you and your dependents. Courts use different tests to evaluate whether a borrower has shown an undue hardship. Of course, hardships sometimes happen, or failure to properly prioritize finances could cause an individual to lapse or default on their student loan. Such as loss of employment, illness, or deployment.
THERE ARE 5 OPTIONS TO CONSIDER IF YOU CANT PAY YOUR STUDENT LOANS At this point, your student loan payments are probably the last thing on your mind. While it may be tempting to avoid student loan repayment altogether, it is important to continue managing your student loans even if you can t pay them. You can start by Contact your loan servicer Change your repayment plan Look into consolidation Consider deferment or forbearance Look into loan forgiveness If you find yourself unable to pay your student loans because times are tough, these are some options to consider. Below you will find a guide to repay your loan in 5, 10, and 20 years.
REPAYMENT PLAN Student loan Debt $ 14,170 Column1 Column2 Column3 Column4 5 Year 10 Year 20 Year $260.96 $143.46 $85.87 Monthly Payment $ 15,658 $ 17,160 $ 20,640 Total Payment
CAREER CHOICE According to : (https://www.bls.gov/oes/current/oes211018.htm,)and (https://virginiajobs.peopleadmin.com/postings/search?utf8=%E2%9C%93&query=mental+ health&query_v0_posted_at_date=&624%5B%5D=any&627=&696=&commit=Search) I ve put together a salary range for employment upon earning a degree in health and human services. Here I found a high range to low range and comparing the two salaries below you will find a median for salary range for this chosen field.
JOB TITLE: SUBSTANCE ABUSE, BEHAVIORAL DISORDER, AND MENTAL HEALTH COUNSELORS STATE: VIRGINIA Source 1: https://www.bls.gov/oes/current/oes211018.htm Estimated starting annual salary (average of the two salaries above): 55,909 Estimated starting salary: $51,610 Estimated starting monthly salary: $4,659 Source 2: https://virginiajobs.peopleadmin.com/postings/se arch?utf8=%E2%9C%93&query=mental+health& query_v0_posted_at_date=&624%5B%5D=any &627=&696=&commit=Search Estimated net monthly salary (after taxes): $3,494.31 Estimated starting salary: $60,209-$111,387
Income Net pay/ Home business Month Income After expenses Expenses Monthly Yearly Month Household Bills $ 3,494 $ 550 $ 2,169 Rent $ 300 $ 3,600 EXPENSES VS. Groceries $ 400 $ 4,800 Car Payment Insurance Credit cards Personal loan $ 250 $ 125 $ 400 $ 400 $ 3,000 $ 1,500 $ 4,800 $ 4,800 INCOME $ 2,169 $ 4,044 $ 1,875 $ 22,500 Total
Income after loan payment year 5 Income after loan payment year 10 Income after loan payment year 20 LOAN REPAYMENT Loan $ 261 $ 143 $ 86 repayment Total loan repayment $15,658 $17,160 $20,640 $ 1,908 $ 2,026 $ 2,083
REFERRING TO CHART ABOVE, REPAYING THE LOAN IN 5 YEARS AT $261 PER MONTH WOULD BE THE BETTER CHOICE AS TO NOT INCUR ADDITIONAL INTEREST ON THIS LOAN. REPAYING THE LOAN WITHIN A FIVE-YEAR TIME SPAN WILL ALLOW ME TO MANAGE DEBT AND MAINTAIN DAILY LIVING EXPENSES. In this case I will manage expenses and repay student loans within five-year plan.
REFERENCES: https://www.credit.com/loans/student-loans/student-articles/defaulted-student-loans/ https://www.bls.gov/oes/current/oes211018.htm https://virginiajobs.peopleadmin.com/postings/search?utf8=%E2%9C%93&query=mental+ health&query_v0_posted_at_date=&624%5B%5D=any&627=&696=&commit=Search https://www.studentloanborrowerassistance.org/bankruptcy/
