When money gets tight, the first bill to often go unpaid is the student loan. But borrowers must remember that if their personal finances totally collapse, federal student loans can’t be discharged in a bankruptcy. Also, there are many dangers in defaulting on student loans, including making borrowers:
* ineligible to receive further federal aid
* less likely to get loans, credit cards and jobs
* subject to higher interest rates
* subject to the government taking repayment money from their paychecks and taxes
iWhile it is the responsibility of graduates to take their repayment of loans seriously, HBCUs also have a responsibility to keep their default rates down. All schools should assume the responsibility of increasing borrower awareness of their obligations. Further, schools should be held accountable for exorbitant default rates, especially if they are paired with low graduation rates.
Under current federal rules, all schools with default rates of 25 percent or greater for three consecutive years face loss of eligibility in the federal student aid programs. Schools with a default rate greater than 40 percent in the latest year may lose eligibility to participate in the federal loan programs.
Posted By: DAVID JOHNSON
Sunday, December 5th 2010 at 10:04PM
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