Commentary

Loans don’t go away

DAVE SAYS
Dave Ramsey

Dear Dave,

I have a lot of student loan debt, and I can’t afford the payments right now. Should I send them what I can, even if it’s not the minimum payment, or should I not send anything at all?

Tina Dear Tina,

They’re not going to stop bothering you no matter which option you choose. The benefit of sending them $5, even if the minimum payment is $50, is that you’re forcing yourself to start living on a budget and do all you can to honor your commitment.

You accepted this responsibility, and if that means you don’t eat out or go on vacation until the debt is paid off, then that’s the way it is. But if you’re already living on a beans-andrice, scorched-earth budget and $5 is all you can squeeze out, then give them $5 and let them know with a clear conscience it’s all you can afford.

If you’re scrimping and saving and paying all the money that you have first toward running your household, then secondly toward your creditors, you’ll start finding ways to stretch your dollars even further. —Dave

Garnishing and paying

Dear Dave,

My husband and I have about $60,000 in federally insured student loans. Can our wages be garnished if we’re paying less than the actual payment amount? If so, how far behind do we have to be for that to happen?

Jennifer Dear Jennifer,

To the best of my knowledge there’s no set formula for making this determination. In counseling people, we find some folks who are two years behind making payments before anything is done, while others are flagged at just a couple of months. In reality, they can garnish you immediately if you’re paying less than the agreed-upon amount. But in most cases they won’t mess with you as long as there’s reasonable activity on the account.

The thing most people don’t realize about student loans is that a lawyer doesn’t have to be involved for them to garnish your wages. It’s a lot like the IRS in that they don’t have to sue you in order to take your wages. Congress gave them that power because it’s a federally insured loan.

If you’re having trouble making your payments, don’t just throw up your hands and default. Talk to them about a deferral, and keep sending them whatever you can. Let them know you want to make good on your obligation, and ask what you can do to make this happen under terms you can afford.

—Dave


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2014-01-30 digital edition



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