As mentioned in our tweet of day, November marks the end of many federal student loan borrowers’ 6-month grace periods.
If your first payment is due this month, do you know where to send it? Not knowing this information is one way many borrowers fall behind on their payments and eventually default. Why else do borrowers end up in default? Check out the infographic below to find out their reasons—and remedies for each.
(And, if you don’t know where to send your payments, look up your servicer in NSLDS.)
Have a question about student loan default? Let us know, and we’ll answer it!
(UPDATE: Please note that the image above was updated on March 29, 2013, to correct a typo.)
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I’m not all that surprised many students default on their loans. I think the root of the problem is how much we borrow — you really don’t know where you’ll be financially at graduation so we all just take the money and expect we’ll be employed in a good job immediately after convocation, and often that is not the case.
If you’ve never had debt before, you don’t really understand the burden you’re taking on. If you’ve never made $30,000 or $50,000 or $100,000, then you don’t really understand how many hours it takes to earn that much. It’s extremely hard to reconcile your expectations with your debt-filled reality. It means saying no to a lot of wants right when you start making the money that could otherwise afford them.
I always encourage students to commit to making the minimum payment. Once you’ve gotten into that habit you can pay more, but you have to treat the minimum payment on your loans as important as making your rent payment or buying food. Defaulting on your loans has significant long-term consequences that you should avoid at all costs.
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