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Defaulting vs paying forever and never touching principal – Shaz

By on December 21, 2011
Defaulting vs paying forever and never touching principal – Shaz

In 2010 I made the most money I’ve ever made (Unfortunately I’m now making $20K less now)… but in 2010 I paid over $15K towards my extreme student debt. At the end of that year I looked at my statement and despite all that money paid my principal balance actually went up by $508.

I’m failing to see the point of paying only to keep my fabulous credit score if I can’t buy anything anyway cause I spend all my money on the loans. Also am shocked there is no tax break since It’s my education I’m paying for.

I have applied for an IBR, and I am considering defaulting. I cannot find any laws or clear guidelines explaining what the lender can legally do if I default, or for how long they can garnish wages etc. This is a last resort, but it’s looking more and more reasonable considering my situation. Do you know where I might find that information?

Also, is it true that all loans are forgiven after 25 years of repayment (at which point I will have paid 400% of my debt and still owe the entire principal?) or is that something that the government could decide to abolish at any time?

Thanks very much!

Shaz

READ  How to Borrow Your Way Out of a Student Loan Default and Lower Your Payment

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One Comment

  1. Steve Rhode

    December 21, 2011 at 10:59 am

    I’m assuming you are talking about defaulting on your student loans since you mentioned the IBR. 

    Nothing good will happen from a default. If your account is sent out for collection the collector can add 25% of the balance on as a collection fee. The balance will also grow with interest and penalties. And you may wind up with an administrative judgment that won’t need to go through the court to garnish your wages.

    I’ve had readers that have paid through garnishments for decades.

    The current best plan for government backed student loans is the IBR program.

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