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Private School Loans (Defaulting on Private School Loans)
When you take out private school loans it is very important that you understand that you are legally bound to repay these loans. You face very serious legal and financial repercussions if you neglect to repay, or default, on private school loans. When you sign the promissory note you are stating that you will repay the loan that you are taking out to finance your higher education. Default happens when you fail to repay the loan or meet the terms you agreed to when you signed the promissory note. This is why it is important to read and fully understand the contents of your loan contract BEFORE you sign anything.
Result of Default on Private School Loans
Whether you are simply neglectful, choose not to repay or run into financial distress, the lender will express no concern for your situation. They can take any number of actions against you to recover their money which includes, but is not limited to:
- Send your promissory note to a guarantor agency which will hound you for payment
- Take legal action against you to recover the balance, maybe even requesting payment in full
- Add fees for collection and late charges for the cost of the loan as well as attorney fees
- Report your default to the major credit reporting agencies which will effectively ruin your credit for a decade or more
- Request that your state and federal income tax refunds be shunted to them for repayment of your loans
- Have your wages garnished to meet the balance
- Report the default to your school which can deny you enrollment until the debt is cleared
- Negate your eligibility for other financial aid programs until the debt is cleared
- Disable your ability to benefit from deferment and forbearance options
To Avoid Default on Private School Loans
- Pay your monthly installments on time and in full
- Never ignore mail regarding your loans
- Report all changes immediately (this includes address, marital status and contact information)
- Contact the lender for any problem with payment or requests for deferment or forbearance before you have a problem or become delinquent in payments
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