There are many surveys and studies as to why college students default on their student loan payments. We could sum up everything with the word life, but by breaking it down, we can justify the top three reasons college-goers can become buried in student loan debt and may need help from an attorney such as one from Bunch and Brock. Between owning a vehicle and paying rent or a mortgage, having a student loan is one of college students’ most significant responsibilities that can give them a taste of what the real world is like when paying bills. It is not an easy task, and it is not cheap when paying on student loans, but priorities must get met head-on with persistence and consistency. It is a lesson we all must learn, and it has to begin somewhere.

Tight Budgets


The cost of living can throw a person under whenever budgets are not kept or met. At any moment, college students can have one or more of their bills go over budget and throw them completely off track. The best example would be the electric bill. It is a bill that will never remain the same each month, so it is hard to set a steady budget each month without knowing the variations in the payments.

One month, the bill can be as low as $150, and the next month it can go as high as three or $400 if not more. A substantial amount can throw off the budget, causing a derailment of chain events. The necessities, such as food and rent, can get severely tight. Shelter, food, water, and electricity are the essentials needed to live a somewhat decent life. Cutting back is the only option, but even then, it does not always work. Things of less importance, such as cable bills, fun, and entertainment, can get erased, but it may not meet the budget.

The student loans will become a lesser priority and get neglected over time. Once the payments fall as little as one month behind, it is almost impossible to catch up without a higher income. Suppose more money is spent than coming in. In that case, the student loans will fall into delinquency because the cost of living has a higher demand. Bank accounts can also get destroyed by overdraft fees and bounced checks.

Variable Interest Rates and Payday Loans


One of the most significant things to look for in a student loan is the interest rates. Some loans have fixed rates, while others will have variable rates that fluctuate every month according to the market. It is another added expense that can throw a budget off track. The interest rate will also skyrocket after late or missed payments, along with the dreaded late fees on top of the monthly bill. In some situations, the credit scores will also play a factor, especially if they have to refinance in the future.

Sometimes the student may not want to cut back on their lifestyle, or maybe they cannot cut back anymore. Then they will fall victim to payday loans or other types of loans thinking it will help them keep their heads above water. Yes, it can save a person once in a while, but the results are always the same. When they add another loan to the student loan they have, all it does is add another bill for them to catch up within their budget. It becomes a cycle every time they pay off the payday loan, and they will have to continue the cycle or find more work for side cash. With school and the current job they already have, it will be almost impossible, but few have made it work. The added expenses can also cause a downward spiral with fixed budgets and bank accounts with both the savings and the checking accounts.

Loss of Job or Income


The entire world has witnessed some form of financial strain with the COVID-19 pandemic. Businesses have closed their doors for good, or they remain open with a skeleton crew to keep their business afloat. Layoffs and pay cuts have been the economy’s worst nightmare since the recession in 2008 and 2009. If the college student loses hours at work or loses their jobs altogether, then student loans are the last thing they worry about in the world.

Credit scores can get damaged severely before the student can even get on their feet. Everything begins to spiral, and there is no way to get back the lost income to catch up with the bills. Many banks and loan companies have been lenient with student loans due to the pandemic. The cold hard truth is, it will not last forever, and many have to begin paying something on their loans even if it is an agreed minimum payment. Some students cannot even afford the minimum agreed amount due to the loss of their income.

Many have a difficult time finding a job that pays over minimum wage. Many employers are cutting costs. The government has failed the people with their promises of helping the American people get through the pandemic. The good news is, there is help with the rent and the utility bills, so more banks, and loan companies are starting to look for their money. It also depends on the student’s priorities once they get the money as to what they will do with it.

The Strain


When it comes down to what the entire world is facing, it depends on the student’s responsibility to catch up. It is a strain that holds a person down, and without help from the government on student loans, the debt will be worse than ever. We already see over $1 million not getting paid back on a year without a pandemic. These numbers are expected to soar as we continue to see the strain of everyday life as we all work to get out of the “new norm” and get back to our daily lives. What happens next depends on the future.