Bad Credit Online Magazine - Daily News and Advice on Credit, Debt and Mortgage : Student loans - don't default whatever it takes

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August 13, 2005

Student loans - don't default whatever it takes

Some worry that with recently increased student loan interest rates, many may have problems repaying those loans. Student debt consolidation rate stood at 2.77% and went up by almost 2 percent to 4.7%. Still historically low, but a lot more expensive for big loans.

The chance is high, rates will only increase further, just like a solid rubber bounce ball goes down hard and low, only to jump back almost as hard and pretty damn high. WFMYNEWS of North Carolina gives some advice on how to prepare yourself to pretty much guaranteed higher interest rates.

The one point this article makes, "Consolidate. Paying one loan is less of a hassle than paying several" needs to be taken with great caution. Remember, you live only once and you can consolidate your student loans only once. If timing is bad, you may end up consolidating at the higher rate than some or all of your original loans. I think most of us wouldn't mind a hassle in such case.

The other point that needs some clarity - "Remember, a defaulted loan can remain on your credit report for seven years and could keep you from buying a house or a car."

Student loans are almost impossible to dismiss, discharge or get rid off in some other way. If you become delinquent on your student loan and stay delinquent, it will remain on your credit report till death does you and the loan apart. Once you bring it up to date or pay off, it will still remain as derogatory record for 7 years. See Bad Credit Time Limits for more information on other bad credit things you don't really want happened.

Finally. even with defaulted student loans you still can buy a car and obtain a mortgage, under rather rough terms of course.

 
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