22. Interview with Dr. Aileen Parks: Part 2

16 July 2011

– It is ridiculous, in a sense. And the repayment of student loans is no small feat either. Student loans are some of the most unforgiving debts a person can have in this country.

– There are several options when it comes to dealing with student loans. The first is to make payments on the loan according to the payment plan the lender gives you following graduation. A set payment for a set period of time, negotiated when you first obtained the loan funds, with some lenders giving you the option to pay based on income or on a graduated scale, etcetera.

– Another option is to consolidate your loans and lengthen the payment schedule from, say, the typical ten years to fifteen or thirty, depending how much the total sum of your loans amounts to. This option has positives in that your payments will be less, but the interest will be more.

– Yet another option is deferment or forbearances. Both of these mean that you won’t have to make payments for a set period of time for various provable reasons on your part—economic hardship, graduate school, etcetera—with the former being a pause on your repayment schedule and the latter being a temporary forgiveness of those months of payment. In other words, deferments push back the final date of payment from the time you end your deferment period; with forbearances, however, the ten year period remains the same, which therefore means that when your forbearance is over and your payments start again, the monthly bill will be higher so that you can meet the final date of repayment.

– The last option? Default, or not paying the loans back at all. This is an option that isn’t really an option, though. There are all types of penalties for not paying back student loans: revoked tax benefits, ineligibility for future deferments, a severely lowered credit score, inability to receive professional licenses, garnished wages—the list is extensive and fairly harsh. Essentially, not paying your student loans can cancel out the positives of having a degree in the first place. And, as I said, this isn’t a situation where bankruptcy helps. In all likelihood, the only possible way to get out of repaying student loans without defaulting is in death.

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