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What Happens if You Can't Pay Back Your Student Loans?

Category Student Loans
Depending on the reason you can not repay your loan, there are several possible outcomes. Unpaid loans can result in garnishment of tax refunds and other types of income. This is a guide about, "What happens if you cannot pay back your student loans?".


Ask a QuestionHere are the questions asked by community members. Read on to see the answers provided by the ThriftyFun community or ask a new question.

By 0 found this helpful
November 19, 2005

I'm disabled and returning to school, but I am afraid to take out any student loans. eventhough I could really use them, because I don't know if my health will hold out long enough for me to get my degree or for me to work long enough to pay them off.

I'm on SSD, and there is not enough money to pay my bills now. I have no family to help me. I know that you cannot default on a student loan, but what happens if I can't finish school due to health problems or work long enough to pay them off? Will I still be responsible for them? Does anyone know where I can go to find any answers?

Susan from OK

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November 20, 20050 found this helpful
Best Answer

The U.S. Congress just passed the budget that will cut student aid and raise interest rates on student loans. All of my kids are paying on student loans and a friend of mine paid for 15 years for her master's degree. It can take a very long time to pay them back, especially if you are unable to find a good job after you get your degree.

Education is expensive but luckily for the last few years, the interest rates for loans have been low. You can get forebearances, the interest accrues but you don't have to make payments. It is much better if you know you are having financial problems to apply for one immediately rather than get a bad credit record on your loan.

Do what you can to not borrow any more if you are worried and write your representative about your problems. Maybe they will give those who can't afford to pay back student loans because of medical reasons a break.

Besides grants some schools offer hardship scholarships. Do all you can to pay as you go with grants, scholarships and working.

Susan from ThriftyFun

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November 29, 20050 found this helpful
Best Answer

Contact lenders in your area-Because if you default they can take part of your SSD benefit check to pay for the defaulted loans. Also you should have a financial adie omsbudsman who can answer still your questions and even negioate a payment you can afford-DO NOT DEFAULT!! YOU WILL STILL HAVE TO PAY YOUR LOANS ONE WAY OT THE OTHER! It took me 4+ years to straighten out my student loans and I just wish I had not avoided it for so long. I was in the same position and my loan amount was almost 40,000.00 :0 I have rehabilitated all of my loans through the ombudsman and have a payment I can afford and a GREAT credit rating now, which when I was in default was down the toilet. Hang on and find help-Email me anytime I would be glad to share what I know-Take care!

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January 25, 20060 found this helpful
Best Answer

Thanks for all your responses. I am disabled and living on SSD. The government now requests that anyone who is disabled return school to be retrained, which I am fine with. Re-hab is paying my tuition, but not much else (cutbacks). It is nearly impossible to pay for gas (I drive 1.5 hours each way to get to the college), food, utilities, medical bills, etc. The Pell helps, but money is SO tight. My disabilities (I have several) will never get any better, and will continue to get much worse. To date, I have not taken any school loans out, since if I cannot finish school, I will have no way to repay them. I am unsure if I will be able to finish without financial help.

I have just found out, that if you start school and later get disabled, your school loans can be forgiven. However, if you are disabled when you start school, and cannot finish, you are responsible for them. It seems ironic.

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July 9, 20080 found this helpful

I'm 61 and owe $158,000 in student loans. I took out the loans for my daughter who went to a wilderness program. I'll never live long enought to pay them back. Should I wait until I become disabled in order to ask for "forgiveness"?

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By guest (Guest Post)
December 29, 20080 found this helpful

I am an unemployed Realtor. I have no income to pay. I just turned 62, and have been unable to get work for some time. I got a student loan in the 90's when I had a heart attack in my senior year, working my way through college full time at 49.

Heart Doctor said I could work or go to school but not both, must decide.

I got my first student loan. (Mistake-have never been able to finish my last class, and am now in debt to the tune of $60,000, they say.)

(Yes-it's a nightmare)

I worked and paid on my loan for 5 years, meeting the payment schedule they set up for me. I was told at the end of 5 years my debt was not diminished. They stated they had set up a repayment schedule for me in such a manner that the principle would never be touched.

Only the interest would be paid on.

(They did not tell me this when setting up the repayment schedule)

I am now old, weary, and in a sleeping room. I drive a friends old car, have not been able to make payments on most bills regularly. I have no family.

My first hope for some time is I will get my first retirement check (Social Security check) in a few weeks. ($693 a month). But the Student Loan people are calling me and threatening, demanding immediate payment for the student loan which is compounding, now triple the original amount, after years of paying.

I explained I have no money. They replied the Justice Department is preparing to sue me in court civil law suit and I will be charged $7,000 dollars in late fees and must pay court costs. I HAVE NO MONEY, TO PAY ANY THING, until I get my first Social Security check, which will be my first income in ages.

My landlady, car friend and bill collectors are all waiting for my check.

Student loan people state I must call them Friday with all my bills and income (Not hard-zero, at this point-the bills will take longer)

What will happen to me? Can they put me in jail for this student loan? Will they take my little social security check?

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By guest (Guest Post)
January 17, 20090 found this helpful

There are hardship forgiveness for health and very low income situations. You will have to pay a low good faith payment mine was 20.00 dollars a month until approved work with dept.of education not the collection agency. The most the government will take is 15% of a monthly social security check SSI can' be garnished.

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By guest (Guest Post)
February 6, 20090 found this helpful

You should check with your local ssi office and find out if they have a program that pays for school for you. Here in Ny they have a program called VESID, I'm not sure if this is a state or federal program. They pay for your college if you are disabled. If you have a loan in default you can consolidate the loan to take them out of default. I'm fighting the battle with being disabled and trying to pay my student loans also. It's hard as heck when you have 15 million other bills behind because it takes so long to get approved for disability and by the time you get a check you're already months behind in payments.

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April 20, 20090 found this helpful

In Scotland you get your tuition free if you are from Scotland plus you can get up to £20,000 in student loans with the smallest loan interest rate available anywhere. Plus you get it written off when you reach 65 years old. So if you wish you can just pay the absolute minimum per month and not worry one bit. If you lose your job or dont earn more than £15,000 in a year you don't pay a penny until you are back on your feet.

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June 9, 20090 found this helpful

Come to Studentloanjustice.Org. We're banding together to get standard consumer protections restored for student loans.

Help us. If you don't, you are hurting yourself.

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September 10, 20120 found this helpful

There are hardship forgiveness for health and very low income situations. You will have to pay a low good faith payment mine was 20.00 dollars a month until approved work with dept.of education not the collection agency.

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