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The Collateral For Your Student Loan Debt Is Your Future Earnings.

Let That Sink In For A Moment

The collateral on your student loans is your ability to earn money in the future.

If you fail to pay back your loans, the lender (either the government or bank) can garnish your wages, garnish your Social Security, and even offset and take your tax refund.

This is the key reason why, for the most part, student loans

are not dischargeable in bankruptcy.

 

So, when you take out student loans, you need to calculate your ROI (return on investment) and ensure that you can repay the debt.

Parents Who Take On Loans For Their Kids Owe The Debt.

If the parent takes out the loan, the collateral is the parent’s earnings,

not the student.

Parents should never take out student loans for their children. 

When getting ready to finance college, a lot of parents are under the misconception that if they take out student loans, their children have to make the payments on them. WRONG.

If a parent takes out a loan, the parent is responsible for the loan – not the student. If the student can’t pay, the parents are on the hook for the debt. 

Cosigners On Student Loans Are Just As Responsible As The Student.

Rule 1: DON'T COSIGN a student loan. 

When you cosign a loan, including a student loan, you are just as responsible as the borrower. 

When you cosign a student loan and the student can’t repay the debt – you must repay the debt. This can have an impact on your own credit score, and even prevent you from purchasing a car or house in some circumstances.

If you’re not in a position to personally take out a student loan, then you shouldn’t cosign one. It’s the same thing.

Even in cases where a borrower dies, the cosigner could be responsible for the debt. 

If You Don’t Graduate College, You Still Have To Pay Back Your Loans.

Too many students go to college to “find themselves”. Bad Idea.

Whether you graduate or not, you’re still on the line for your student loan debt. Just because you don’t finish doesn’t get you out of repaying what you’ve already spend on school. You still have to repay your student loans even if you dropped out of school.

 

Refinancing Federal Student Loans Does Not Make Sense For Most People.

Many Federal student loans have income-based repayment programs, or some type of forgiveness program. You will lose access to student loan forgiveness programs and special features like deferment and forbearance.