Occupy Movement: Student loan forgiveness or future loan default? | 11.21.11

Posted in News, Repayment, Student Loans By Student Loan Network Staff

Occupy Wall Street TentThe Occupy Wall Street movement has been going on for a couple of months now, and as I’m sure many are aware, the subgroup of Occupy Student Debt has captured the media’s attention. With tuition at astronomical numbers, and unemployment at a high rate, many students and graduates are unable to repay their loans. Because of this, OSD has a new plan to encourage higher ed reform: refusing loan repayment. In the Inside Higher Ed article Refusing to Pay, Libby Nelson writes:

“Most experts, even those who agree with the movement’s aims, would describe these goals as unattainable. The theory behind the campaign is that if 1 million students refuse to pay, they would face minimal consequences due to safety in numbers. But many experts on student finance worry about the impact on anyone who stops paying: student loans cannot be discharged in bankruptcy; lenders — especially the federal government — will go to great lengths to go after debt; and some borrowers currently frustrated by their debt may not realize the impact of non-payment on future financial goals.”

Student loan default can have massive consequences to the borrower, and it’s important to know what your options are if you cannot afford your loan payments.

How default works

For federal loans, once you miss a payment, you are considered in a state of delinquency. If you remain in delinquency for 9 months, your loans are then in a state of default.

Consequences of default

  • Your loans will be turned over to a guaranty agency
  • The loan may be accelerated, meaning the entire loan amount becomes due immediately
  • You may be subject to garnishment of your wages
  • Credit bureaus will be notified and your credit may suffer
  • Your loans are no longer eligible for federal benefits

How to avoid default

If you’re having trouble making federal loan payments, there are options available to help ease the burden. Student loan deferment and forbearance are available in certain circumstances such as economic hardship, and even unemployment. Additionally, consolidating your student loans could help lower your monthly payments, as well as your interest rate. For borrowers with private loans, your lender may also offer forbearance and consolidation. If you find that your loan payments are too much, talk with your lender as there may be more options available than you think.

To learn more about avoiding default, and what happens once you have defaulted, read How to Avoid Student Loan Default.

5 Most Recent Student Loans Blog Posts:

The Student Loan Help blog is sponsored in part by:

295 Responses to “Occupy Movement: Student loan forgiveness or future loan default?”

  1. tracy collins says on January 12, 2012 at 2:44 pm:

    This is very good information about student loans .

    Reply To This Comment
  2. April says on December 22, 2011 at 9:41 am:

    I’m currently back in a deferment status after being laid off from my job in June 2011. I’ve been in and out of deferment for 15 years, have paid $1,000′s in interest and owe more than I borrowed. Sound familiar? Anyway, I tried to change my deferment status to income-based payment (which would have been $0 month) but was denied because I’m already in deferment. Now I’m being forced to use up the few months of deferment that I have left. Further, my months of deferment wont count toward a forgiveness if I’m not able to pay my loans back in 25 years (I think we all know the likelyhood of that prospect!) I’ve been in graduated payments for years and to really drive a knife in my side I realized I could have been paying about 15% of my already reduced payments if I would have been in the income-based plan. Do you think my loan holder ever suggested that option to me durring all of those phone calls I’ve made to keep from defaulting? Absolutely not.

    Reply To This Comment
  3. April says on December 22, 2011 at 9:26 am:

    Children placed by the courts with relative caregivers save more than $6.5 billion annually in Federal Foster Care cost and should be included in the definition of “Public Service” in loan forgiveness. Please sign the following petition and pass it along. Only 150 signatures are needed to make this petition available to the the public and 25,000 for White House review. We should all use every opportunity we have to repeat “student loan forgiveness” to the White House.

    Dear friends,

    I wanted to let you know about a new petition I created on We the People,
    a new feature on WhiteHouse.gov, and ask for your support. Will you add your
    name to mine? If this petition gets 25,000 signatures by January 20, 2012,
    the White House will review it and respond!

    We the People allows anyone to create and sign petitions asking the Obama
    Administration to take action on a range of issues. If a petition gets
    enough support, the Obama Administration will issue an official response.

    You can view and sign the petition here:


    Here’s some more information about this petition:

    Forgive Student Debt of Relative Caregivers in Custody of
    Long-term Court Ordered Placement of Children.
    Relatives that care for children placed by the courts are often referred
    to as Relative Caregivers and provide one of the greatest public services to
    these children, their communities and society as a whole. Student loan
    forgiveness of those in public service should be redefined to include
    Relative Caregivers. When a child is removed from a home that is not safe
    they may end up in the foster care system. Another option that social
    services and courts promote is placement with a relative. After a child is
    adjudicated dependent an approved Relative Caregiver may gain long-term
    permanent custody which in turn removes this child from the system and
    alleviates a huge financial burden on society. Relative Caregivers give of
    themselves with no promise or expectation of financial gain.

    Reply To This Comment
    • Barbara says on August 8, 2012 at 6:38 pm:

      I think all foster parents should qualify for student loan debt forgiveness as this is a major public service, especially therapuetic foster parenting. I would sign a petition for this.

      Reply To This Comment
  4. Saleem says on December 14, 2011 at 7:50 pm:

    I love the idea that President Obama is going to help us consolidate at lower rates. Not paying tons of interest a month will be very helpful.

    Reply To This Comment
  5. tracy collins says on December 8, 2011 at 11:32 pm:

    Awsome information !

    Reply To This Comment
  6. talia says on December 5, 2011 at 11:34 pm:

    i hate students loans interest fees

    Reply To This Comment
  7. Heici says on December 5, 2011 at 10:59 pm:

    I’m sticking to scholarships.

    Reply To This Comment
  8. Jenn says on December 5, 2011 at 10:22 pm:

    Nothing is free in life. Money borrowed needs to be repaid

    Reply To This Comment
  9. ziah says on December 5, 2011 at 9:31 pm:

    i just wish the violence would end!

    Reply To This Comment
  10. somaya says on December 5, 2011 at 9:24 pm:

    I’m all for the *idea* of living within your means to try and stay out of debt, but that’s hard when you’re trying to get a high quality education and realistically, it just doesn’t work that way. I’m an A/B student and I could go to my local community college and live at home which would be my most affordable option and I would still need loans that I would have trouble paying back because my family just. Can’t. Afford it. Living “within my means” means not going to college at all for me.

    Reply To This Comment
  11. Beverly says on December 5, 2011 at 8:29 pm:

    Not having to pay back my student loans would be awesome.

    Reply To This Comment
  12. Boon says on December 5, 2011 at 8:23 pm:

    Some of the things that these occupy people are protesting for is really stupid….

    Reply To This Comment
  13. andrea says on December 5, 2011 at 7:38 pm:


    Reply To This Comment
  14. Shalee says on December 5, 2011 at 6:58 pm:

    It is completely possible to go to college and not go into debt.

    Reply To This Comment

Leave a Reply

By clicking 'Submit Comment', you agree to the Edvisors Terms of Use and Privacy Policy.