Defaulting on student loans will cost you

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Defaulting on student loans will cost you
06:38 PM CST on Friday, March 6, 2009
By Sherry Williams
The money crunch is teaching a tough lesson to recent and even not so recent college graduates.

Meet Lorie Alcazar. She’s a junior dance major who is working two jobs.

In fact, Alcazar said that her money is as tight as her time so she’s getting a student loan.

Alcazar is not alone, say experts.

Figures show that she and other classmates who receive student loans will, on average, be $50,000 in debt when they graduate.

“I’ll be having to pay a lot of money (laughter) a lot of money back but it’ll get paid off, most definitely,” said Alcazar.

Financial planners say Alcazar had better pay off the loan because those who default on student loans will face financial fiascos.

Financial advisors like LaVera Prestage say that defaulting on a student loan is as bas as bankruptcy.

They say that most loans are government backed, giving lenders more power to get repaid.

“They will contact your employer and garnish your wages,” said Prestage.

If you can’t pay there are things you can do.

Experts say you should contact your lender. They say that the lenders will work with you and sometimes allow restructured payments as low as $20 a month.

Prestage said that some employers will even help you repay part or all of your student loans.

“Especially teaching and in the medical industry. There are opportunities to get help to pay those student loans,” she said.

Many other fields of employment offer student loan repayment assistance or even complete loan forgiveness, but you have to do your homework.