Focus on Family: Student loans

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John Amatulli

Amatulli & Associates Financial Services
8025 Wicker Ave Suite I
Saint John, IN
(219) 365-5544


Minimize Debt
More than 40 million Americans are now paying back more than $1.2 trillion in student loans, with an average debt of nearly $35,000 per person.
It is much easier to accumulate debt than it is to pay it off.
Before you take out any loans, make sure you have explored all of your options - like living at home, attending community college for a year or two, work-study and scholarships.
A calculator can help you get a realistic idea of how much debt you’re taking on and how long it’ll take to pay off.

Know Your Terms
It seems simple, but you need to make sure you know all of the loans you have. It happens more often than you think - loans can get lost in the consolidation process, or you miss a notice if you move after graduation.
More than 40% of Americans who borrowed from the government’s main student loan program aren’t making payments or are behind - a lot of that is due to a lack of awareness.
Your first step should be to search the National Student Loan Data System website.

Don’t Default
You can face serious consequences if you default on your loans; the government can withhold your wages, tax refund and Social Security benefits.
About 36,000 Americans had their Social Security payments garnished in 2013 due to an unpaid balance on their federal student loan.
The government offers several repayment plans for borrowers who are struggling to pay off their loans.
Call your lender before you start missing payments to work on setting up a plan.

No Escape
Federal law prohibits student loans from being wiped out in bankruptcy, except in rare circumstances.
Other forms of consumer credit, like mortgages, credit card debt and auto loans are easier to wipe away in bankruptcy.

What should parents keep in mind before cosigning a loan for their children?
Nearly four in 10 people who cosigned a loan ended up having to pay some or all of the bill because the primary borrower didn’t pay it.
If your child misses a payment, you are the next person they contact. Before you cosign, make sure you have the money to pay those bills if absolutely necessary.
It can damage your credit if your child misses just one payment. Have a conversation with your child about how important it is to be paying their bills on time.
Build a solid relationship with your child so you can openly communicate with them about their finances and the importance of paying off their loans.

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