Student loans are a common and convenient source of funding used by more than half of the students at the University of Illinois to help pay for their education. Many students do need to borrow and consider this a wise investment in their future. Before borrowing a student loan, consider this important information:
- Borrow only what you need and can reasonably repay.
- Develop a realistic budget and consider ways to lower your costs.
- Research the average pay of your chosen field to know if your projected earnings will be enough to repay your student loans.
- Keep track of your loan debt (principal and any accrued interest) so you will know the amount you will have to repay.
- Know that repaying your student loan on time can help establish and maintain an excellent credit history.
- Be aware that student loans are in your name and affect your credit history, so you should know and understand the obligations.
- Unlike other forms of consumer debt, student loans cannot be discharged through bankruptcy except under extraordinary circumstances.
- If you fail to make a payment on your student loan for an extended period, your loans may be placed into default.
- A default on a federal student loan will require payment of additional costs, including collection costs, attorney’s fees, court costs, and additional interest. These costs may substantially increase the amount owed on your student loan.
- No statutes of limitation apply to the collection of federal student loan debt. This means that your student loan debt may be collected many years, or decades, into the future.
- The IRS may seize your tax refunds to repay a defaulted federal student loan.
- Your future wages may be garnished to repay a defaulted federal student loan.
- Your Social Security benefits may be garnished to repay a defaulted federal student loan.
- Any disability benefits you receive may be garnished to repay a defaulted federal student loan.
- A default on a federal student loan may result in the denial or revocation of a professional license, such as a license to practice medicine or law.
Written by Josh Keen, Office of Student Financial Aid