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What Not to Say
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I'm sure you just want to know: Who do I have to call, and what can I do to fix things? Fortunately, you have several options. You'll also be glad to know that some recent changes in the law have actually made it easier than ever to get out of default. In a nutshell, to get out of default, you have four alternatives:
- Consolidate the loan.
- Enter a loan rehabilitation program.
- Pay the loan off completely.
- Get the loan discharged or cancelled.
Most borrowers will go for the first two options, for obvious reasons. If you had the money, you almost certainly would have paid by now, so paying off the loan isn't realistic for the majority of college grads. Getting a discharge is very rare, though it can be done. Loan discharges or cancellations are generally granted for three reasons:
- The death of the borrower or student;
- The total and permanent disability of the borrower or student; or
- The closing of the school you attended.
It's important that you know what not to say when you first pick up the phone, call the Department of Education or your guaranty agency, and start dealing with your defaulted loans.
The following are various circumstances and reasons that will not be accepted as valid excuses for nonpayment of a student loan:
"I moved or I was never sent a bill." Here's what the Department of Education will say in response: too bad. The notices they send are, in their language, a "convenience." It's your responsibility to provide your current address and to pay your bill regardless of whether or not you got a bill.
"The quality of the instructors or facilities at my school were poor and I didn't get my money's worth." Once again, their attitude will be: so what? It was your responsibility to check it out beforehand. (Some rare exceptions do exist. See the later section on loan cancellations/discharges pertaining to school closings or fraud by a school.)
"The statue of limitations in my state for collecting a debt has run out." That may be the case for other debts. But a special section of federal law (Section 484A[a] of the Higher Education Act) provides for no statute of limitations whatsoever on defaulted student loans.
"I wasn't 18 or of legal age when I signed for the loan." Your young age (or youthful ignorance) doesn't matter. The argument you're trying to put forth is known as the so-called defense of infancy. But just because you were a minor doesn't mean that you didn't obligate yourself when you signed that promissory note, which is a binding contract. This is because no defense of infancy is accepted under the Higher Education Act of 1965.
"I want a deferment or forbearance, and I qualify for one." Not so fast. You might think you're eligible for a deferment or forbearance, and under other circumstances you might be. Unfortunately, though, once you let your loan go into default you gave up your right to a deferment or forbearance. These options are only available before you default on a loan, or after & defaulted loan has been "cured" via loan rehabilitation and taken out of default status.
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Article Title : What Not to Say |
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