Things You'll Need:
- How to Bankrupt Your Student Loans by Chuck Stewart Phd.
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Step 1
Don't let this be you!Realize that Colleges and Universities are businesses. Many are what are referred to as "Loan Mills". What that means is that their purpose is to get students in over their heads in debt. They get kick backs from government lending institutions that are actually PRIVATE BANKS, not goevernment agencies.
Universities also lull you into a false sense of security. You can easily fall into the lifestyle that they created without questioning it. Your comfy way of life as a student benefits them, not you. -
Step 2
When I was in my senior year I was offered a lot more financial aid than the previous years because of my 4.5 GPA. I went into school as an "Under-priviledged White Person" which entitled me to Grant money. Since I was poor, I preferred to receive grants as I didn't have to worry about paying them back. When I picked up my loan check, the woman at the desk told me she had replaced my grant with a loan "because it was more money."
She put me an extra $1000 in debt without consulting me.
Moral: Don't let them do that to you if you don't want it. Question everything and stand up for yourself. -
Step 3
Its for the long haul...Student loans are the only kind of loan you can never pay off. They will tell you can have a 5 year grace period before you have to start paying so you can "get on your feet". Don't fall for it. During your grace period, your debt is collecting interest. Any unpaid interest is added to your CAPITAL. This is why you can pay, and pay, and your Capital never goes down.
Pay the interest off as soon as you can even if you have to take a bank loan to do it.
The Capital is the part that is GUARANTEED. The part they erroneously, and self-servingly, call "Taxpayers money". -
Step 4
Don't fall for the "low interest rate" spiel. There is no such thing in student loans. If you don't pay the interest, it is added to your Capital. If you fall behind in payments, the interest is compounded. If you default through no fault of your own -- say the economy goes bust -- they will hound you to your grave, add thousands of dollars in interest, compound interest, and collection fees. They will tell you it is impossible to discharge student loans in bankruptcy.
Of you default,they will take your income tax returns, and garnish your wages. believe me -- it happened to me.They have even taken social security checks from retired people.
You are better off to get a bank loan and pay it off. That way if you need to declare bankruptcy, you can do it easily. -
Step 5
The Department of Education will never negotiate with you. I came back to the U.S. after 10 years living in Europe (and made payments on the loan by the way) The minute I got off the plane they were on top of me like a dog on a bone. The only form of negotiation they will respond to is a lawsuit. I had to declare bankruptcy to prevent them garnishing my meager wages.
Of course they assume they will win, so there is no intention of showing mercy to honest debtors.
