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Dealing with student loans

The consequences of defaulting on student loans are steep. Students who default on loans owed to their school receive a discharge of their federal student loans, which could mean losing access to any federal education aid, this means they wouldn’t be eligible for any graduate student loans in the future.

In California, that means losing eligibility for financial aid that could add up to tens of thousands of dollars in loan debt over the course of a degree or certificate. This is exactly why it is always important to seek financial assistance in these cases, by visiting websites like

According to California’s official data, 15.5 percent of borrowers who owed $20,000 or less on their loans at the end of 2015 did not make any payments during the year, according to data from the Department of Finance. In those states, students who defaulted on their federal student loans can lose federal loan subsidies and scholarships they had been eligible to receive for up to five years.

Some of the worst states for student loan defaulting are California, Hawaii, New Jersey, Washington and Illinois, all of which placed in the top 10 for students who defaulted on loans owed to their school.

How do states do it? Some, like California and New Jersey, have specific laws that require borrowers to stay current on their loans. But others are more subtle. “I don’t think that anybody’s really thinking about this,” said Michael Feroli, a law professor at the University of Pennsylvania. “It’s just part of the landscape.” In some cases, lawmakers have simply taken away the ability to pay up to have the student loan forgiven. There are several different types of loans, but the largest category, federal student loans, are issued to young people who plan to earn at least $55,000 a year after graduation. Under those loans, the interest rate is currently capped at 3.4%. After that point, the interest rate is based on the amount of time students have borrowed, as long as the debt remains outstanding for three years. In some states, such as New York and California, the interest rate is higher.

California: Interest Rates on Borrowed Debt 10 Years After Graduation Amount Interest Rate 25% $10,500 $35,625 30% $17,500 $55,000 35% $22,500 $75,000 40% $25,000 $100,000 45% $29,000 $125,000 50% $34,000 $150,000

Students who borrow money to start their career can get a great deal of student loan forgiveness. When students graduate from college, they’ll be able to get the money back from the Federal Pell Grant, the Pell Scholarship, and the Federal Work Study. They can also get money from the Federal Supplemental Educational Opportunity Grant. This means students will be able to finish their education debt-free and they can continue to work. Many students can get more debt forgiveness. For those who took out Federal Direct Loans, the student loan forgiveness amounts will vary based on the amount of the student’s loan that was in deferment. Interest Rate on Direct Loans 10 Years After Graduation Amount Interest Rate 10% $20,000

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