Defaulting on repaying your student loan in due time in America is a very serious issue, especially if it’s a federal institution. In some cases, it might even involve the U.S Marshal, whose primary job is specifically to conduct fugitive investigations and is also tasked with the responsibility of arresting more federal criminals than all law enforcement agencies. So, yes, if a student fails to pay back his/her student loans as when due, the government might decide to take some of your assets, including your car. Let us know about, Can Student Loans Take Your Car?
Before delving more into why student loans might involve federal officers, it’s imperative to look into the history of student loans and why it is now one of the hottest discussions in the country.
Can Student Loans Take Your Car?
What are Student Loans?
Student loans are a form of financial aid intended to help students access higher education in the country. Federal student loans were introduced in America in 1958 under the National Defense Education Act (NDEA). Initially, they were only made available to selected categories of students, such as those studying engineering, science, or education.
The program was a direct response to the belief that the Soviet Union was getting ahead in the Cold war, especially in the area of science and technology. Consequently, the federal government under the Higher Education Act of 1965 implemented the policy and the Bank of North Dakota made the first federally–insured student loan in history in 1967.
Furthermore, the program extended its arm to all students in the United States who are willing and ready to borrow from the government to fund/her education for personal development and consequently the society at large. Successive governments over the years have contributed in a way or two to the development of the program, by putting in place policies that they think will serve both the student and government well and create a literate America where the citizens will not only compete favorably at the world stage but control the narrative in every conversation and at the highest arena.
Pros and Cons of Student Loans.
The issue of whether student loans are still needed remains one of the hottest topics in America today. This is because of the problems encountered by defaulters, laps in the system, bad advice from creditors, the interest rates, and the slope in the employment curve that might affect the rate at which students pay back their loans.
To adequately analyze the advantages and otherwise of student loans, let’s look at the program from both sides of the coin.
Now, some of the advantages of taking a student loans is disclosed below. One will surely know of they should take a student loan or not. This will help them to achieve what they are willing to get when it comes for educational purpose.
Advantages of Student Loans
- College fees in most advanced countries of the world are not cheap and the United States of America is no exception. Although countries like Germany and most Scandinavian countries offer free tuition for their citizens, the United States meanwhile provides world-class services and infrastructure for their schools and these things don’t come cheap.
- The average cost of college tuition, room, and board for the 2107- 2018 academic year is between $20,770 for a four years public, in-state school and $46,950 for a four years course in a private university. Due to the high cost of going to school in America, only a handful of students, even coupled with help from parents and guardians, can afford to cough out such an amount for schooling.
Similarly, student loans might be the difference between a student attending the school of their choice rather than attending any available university Onsight.
Disadvantages of Student Loans
- Student loans might be attractive because of all their obvious benefits but it’s not as exciting as it looks. The program can be pretty expensive in the long run. When you borrow student loans, you don’t only pay back the amount you initially borrowed, you will have to pay back interest too. This interest can range from 4.4.5% for federal student loans to 11-15% for private student loans.
- This automatically means that the student is starting his/her life with a debt that will keep increasing as the day goes by. One of the scariest aspects of the student loan program is the way and manner in which the government comes for their money if the student is unable to pay as when due.
- In some instances, the government can suspend the license of the person, their assets including the houses, cars, deposits in banks, and other valuables can be seized and sometimes even auctioned by the government, just to recoup back their money.
These are some of the disadvantages of taking a student loan. Now, an individual willing to take student loan must take these disadvantages quite seriously.
Losing Your Car to a Students Loan
The government might decide to take your assets, especially your car if you fail to:
- Payback your loan when due
- Default on paying back the loan after several extensions
- When the loan has accumulated so much interest and there’s no willingness to pay back on your side
- When there is little or no credit on your card
- If the car is the major asset available to confiscate
- When there’s no roadmap on payment and there’s no other asset worth the value of the loan except the car.
In conclusion, these practices have been condemned by quite a lot of people in the United States, including Senator Bernie Sanders who made forgiveness of student loans one of his campaign promises during the 2020 presidential elections. Right now, student loans in America are about $1.75 trillion, with about 46 million Americans owning one form of student debt or another, with each person getting worried if the states will come for their job, cars, or even houses anytime they want.