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5 Facts Borrowers Should Know About Student Loans

Ferguson Hayes Hawkins, PLLC Jan. 5, 2017

Many students who want to attend college have to consider student loans as the main source of payment for their college education. Not every student understands the long term impact of taking out a loan for school. Before taking out a loan, every potential borrower should know the language associated with their loan as well as all student loan facts including what happens if they default.

Repayment Plans

Borrowers understand that they are entitled to a deferment on loan repayment, but not all borrowers understand that they are entitled to a forbearance as well. When a loan is deferred, there is no interest accruing. During a forbearance, interest is still growing on the initial loan amount. Aside from the ability to put off paying back the loan immediately, there are other types of repayment plans available based on income and the loan type.

Military Provisions

If a person goes into the military, there are programs to lower the interest rate for active military members. Loan forgiveness might be a possibility too. The active military person must ask for forgiveness or a lower interest rate before the loan becomes defaulted.

Interest Rates

Federal student loans have a lower interest rate than other kinds of loans. They are specifically for students and have a fixed interest rate over the life of the loan. They are considered subsidized loans because the government essentially pays the interest on the loan until the student begins the repayment plan.

Credit Check

In some cases, a student loan might require a credit check to make sure that the person hasn’t defaulted on other loans. Credit checks will only impact the student loan if there have been other loans not paid. Private loans will always check credit, but most federal loans will not.

Discharge Through Bankruptcy

Concord NC bankruptcy attorneys can help borrowers with student loan debt relief in many ways, but a student loan cannot be discharged through bankruptcy action. They can help with rehabilitation efforts if the borrower hasn’t taken that track previously. There are other student loan debt relief actions that can be taken by good Concord NC bankruptcy attorneys. These student loan facts should help with any repayment efforts and influence whether borrowers should ask for loan forgiveness, deferment or other repayment plans. If you should have any questions about debt relief or personal bankruptcy, then please contact our trusted attorneys today.