You can get into some legal problems and financial issues if you do not pay back your student loan. Of course, circumstances always come into play. The law and judges do consider your unique situation before they make a judgment on such matters. Here are some of the possible outcomes if you don’t pay your student loans.
If your case is going to court, you will have to agree to work out payment. If not, your possessions could be taken or your wages could be garnished. Civil actions are not criminal charges, but they can put a financial and legal strain on your life. There is also a lot of paperwork involved, and so forth.
Federal loans, unlike private loans, carry a stricter penalty for not paying them back. They’re usually much larger loans, but they also hold you responsible until it is all paid back.
There are cases when people can get student loan forgiveness. Whatever the situation, you’re responsible for every penny you borrow. The federal government does have legal recourse to file a criminal action against you for failure to pay back federal monies.
This may sound scary but a lot of people do borrow federal student loans and have trouble paying them back. The government realizes this. They try to work with former students of state institutions much like the IRS does if you get into trouble.
What’s next for student loan repayment?
The issue is always centered on what you are doing to pay back money that you owe. They will usually work with you and work out a plan. President Trump has recently learned how massive the overall student debt is in the country and he is working on a project right now that would allow some student loan to be forgiven provided students start paying back what they owe.
There are thousands of people who owe a significant amount on their student loans that they took out years ago and President Trump is trying to formulate a plan to get Congress to pass this law that would help college students greatly to lessen the burden of their loans. (Read more on that here.)
We’ll see how that comes out. In the meantime don’t take out more than you can pay back based on a salary you predict that you’ll make once you finish college.
Remember that wealth is what you have when debts are subtracted from your actual income and assets. If you barely have anything left because of the large amount of your student loan, you have nothing. Think carefully because it is better to owe a little and have a smaller degree or training certificate that can make you money, than a huge amount of money that you will never pay back and a career that does not pay well enough to justify the debt.