5 reasons why Student Loan Debt is so Dangerous
<p data-sp-element=”content”>Almost every young person in America has to take out student loans in order to further their education. With the rising cost of college, however, more people are taking out higher amounts of student loans than ever. Unfortunately, this is some of the most dangerous debt on the market today. There are five reasons why.
- The interest rates aren’t steady. Student loans have variable interest rates, which can change once a year. If the rates go up, your payment goes up. While rates are low now, it’s possible that they could double by next year.
- You cannot discharge the loans. Unlike almost every other type of debt, you cannot get out of student loans with a bankruptcy filing. This means that you will always owe the debt, no matter what your employment or health situation looks like.
- You could have your wages garnished. If you don’t make payments for a while, it’s perfectly legal for the government or a private company to garnish your wages. That means they can take up to 15% of the money you earn directly out of your pay before you even see it.
- The government can take your tax refund. In addition to taking your paycheck, it’s also legal for the government to garnish the entire amount of your federal tax refund. This can be a big problem for anyone who regularly relies on their tax refund to pay their bills or make major purchases. Since fees are usually added for the “convenience” of the government garnishing your check, it’s possible for a person to lose their tax refund check for decades before the debt is paid off.
- Your Social Security check could be garnished. If you cannot get the debt paid off during your working years, then the government has the right to garnish your Social Security checks. That’s a huge cut in income when you’re unable to work anymore. Unfortunately, this is becoming much more common as late-in-life students are unable to pay their student loan bills before they retire.
If you are struggling with your student loans, you may want to consider a debt consolidation loan. This will pay off all of your loans and give you a new payment schedule with a much lower monthly payment.