STUDENT LOAN QUESTION: I was curious about whether you could be put in jail for defaulting on student loans?
Mindy аѕkеԁ:
I hаνе over $100,000 іn student loans аnԁ аm nοt mаkіnɡ very much money аt аƖƖ. I’m barely аbƖе tο pay mу bills аnԁ thеrе іѕ nο way thаt I саn manage $1100 a month. I’m wondering whаt wουƖԁ happen іf I јυѕt send іn $100 a month until I ѕtаrt tο mаkе more money. I саn’t even afford HALF οf whаt I’m supposed tο pay! AƖƖ οf thіѕ college ԁіԁ nοt lead tο a very high paying job. FYI: Thеѕе аrе FEDERAL loans аnԁ hаνе already bееn consolodated. I still hаνе a year οf unemployment deferment left аnԁ wіƖƖ υѕе іt іf I hаνе tο. DOES ANYONE KNOW IF YOU CAN BE PUT IN JAIL FOR NON (OR SLOW) PAYMENT OF STUDENT LOANS? I know thеу саn take tax returns, bank accounts, аnԁ even prevent уου frοm getting сеrtаіn kinds οf government jobs. If I work аѕ a public school teacher саn thеу take mу teaching certificate? I’m nοt trying tο ɡеt out οf paying thеѕе debts, іt’s јυѕt thаt I саn’t ԁο іt οn thеіr schedule!!!! I wουƖԁ bе dying аt $200 a month, аnԁ thеу want more thаn I саn pay. Anу REAL asnwers please!
September 23rd, 2009 at 9:46 am
Get a deferral.
September 25th, 2009 at 12:50 am
There is no debtor prison, so no, you can’t be put in jail. However, you should contact the lender and ask if you can put your loans in forebearance. You still pay interest on your loan, but you don’t pay against the principal.
September 26th, 2009 at 4:31 am
I don’t beleive they will put you in jail as then they can’t get any money. They will take what they can get from you, but it will definately ding your credit. Call them when the time comes for you to start making payments and see what you can work out. I would suggest you get a second job as you will be paying that forever on a teachers salary and you cannot get rid of that debt through bankruptcy.
September 26th, 2009 at 10:18 am
Nope, there is only one debt you can be arrested for in America, and that’s nonpayment of child support. You should contact your lender and apply for a forbearance on the loan, the payments will stop but the interest will still accrue.
Most lenders are just happy to receive SOMETHING rather than nothing.
September 28th, 2009 at 7:58 am
the Federal government will NOT put you in jail if you do not pay your student loans, but they will hound you until you do, and since you say you cannot get a job that pays for the loans you minds well get used to the idea you’ll be paying on those forever because the interest will eat you alive. I’m curious though what degree(s) you got for that large an amount of money, email me and maybe I can make suggestions since usually for paying that kind of money there are jobs out there or you open your own business. The Federal government says they never refuse any money you send them, however if you go into a student loan website and check their calculator you’d be amazed how long you will have to pay on those loans at $100 a month. People with high bills take on 2-3 or more jobs to pay those off. And yes, surprisingly even though the government wants their money back they do dun your credit report to keep you from paying it back. Go figure. I think it’s because they have created so many new collection positions who are now allowed by law to charge up to 15% more per year on top of your loans as their collection fee.
September 30th, 2009 at 7:54 am
You cannot be put in jail for defaulting on your loans because there is no debtor’s prison in the U.S. Also, you cannot have your education revoked because of bad debt. However, your Alma Mater may withhold your educational records if you are in default, which could make getting a job in education difficult.
The minimum monthly payment allowable under the federal student loan program is $50.00. If you are making a payment of at least $50.00 per month, you are making payments and should not be reported to the credit bureaus for non-payment. Default means you have not made any payments and have not been in either forbearance or deferment status for 270 days.
The monthly payment you stated is probably for a Standard Repayment plan. U.S. Federal Student Loans have four possible payment plans: Standard, Extended, Graduated, and Income-Contingent.
The Standard Payment plan is for a repayment period of 10 years (or 120 months). The payment is the same for the entire repayment period of the loan. So, if you owe $100,000 at 7% interest and repay for 10 years, your monthly payment would be $1161.00. (Over the life of the loan, you will pay $40,000 in interest).
The Extended Payment plan is for a repayment period of up to 30 years (360 months). The payment is the same over the entire repayment period of the loan, but tends to be less than the standard because you are paying over a longer period of time. So, if you owe $100,000 at 7% interest and repay over 30 years, your monthly payment would be $665.00. (Over the life of the loan, you will pay $140,000 in interest).
The Graduated Payment plan is for a repayment period of 12 to 30 years. The payment starts low and increases at regular intervals. The initial payment is either the monthly accumulated interest or half of the standard payment, whichever is greater. The payment will never be greater than 1.5 times the standard payment. The initial payment in a Graduate Payment plan if you owe $100,000 at 7% interest is $583.00. (The total interest paid will be more than with a Standard Payment plan and will depend on how long you choose to repay the loan).
You may be eligible for an Income Contingent Repayment plan (ICR). This plan has a repayment period of up to 25 years. It is based on your Adjusted Gross Income (AGI), family size, interest rate and total amount of student loans. The payment is calculated annually based on the above information. This payment may be less than the amount of accumulated monthly interest. So, with the above assumptions, your payment could be less than $580.00 per month. Hopefully, the payment could be less than $200/mo.
You need to call the servicer of your loans or at the very least go to their website. Look on the Promissory note you signed for your loan consolidation to determine who owns your loans.
If you are a public school teacher in a critical need area, you may qualify to have some of your debt paid by your state or school district. Talk to your school district’s personnel office.