defaulting on loans

Started by Stephie3
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Stephie3

Full Member
10+ Year Member
i just saw a thing about defaulting on school loans that says "it may be difficult to get your professional license renewed"

which is just another great thing to think about right before starting dental school.

i have never defaulted on loans, but was wondering..what if when you graduate dental school it takes you a few months or so afterward to find a job? for some loans, there is no grace period. are they going to revoke your license for something like that or make it impossible to get your license renewed? what are the consequences, etc...
 
Stephie3 said:
i just saw a thing about defaulting on school loans that says "it may be difficult to get your professional license renewed"

which is just another great thing to think about right before starting dental school.

i have never defaulted on loans, but was wondering..what if when you graduate dental school it takes you a few months or so afterward to find a job? for some loans, there is no grace period. are they going to revoke your license for something like that or make it impossible to get your license renewed? what are the consequences, etc...
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Many loans have a 6 month grace period right out of school. The rest you will have to place in forebearance by claiming economic hardship or whatnot. You have many options. It would take a long time (like years) of not being able to pay your loans (becuase you can place it into one of several categories of forebearance for many months apeice) before defaulting.
 
A loan default can be different depending on the type of loan and somewhere in the mumbo-jumbo is the "default clause." On federal loans (Stafford, PLUS) you would need to be 270 days past due with the loan considered in active repayment (meaning you legally are required to pay according to the contract). Your loans will always be one of three status: deferred (not legally in repayment), grace (not legally in repayment) or repayment. "Repayment" is the status of the loan and not indicative of you writing a check. To clarify, if you were unable to pay when required, you could request a forbearance to temporarily stop having to make payments on the loan. Although the loan would still be considered in repayment, you now have an agreement outside the terms of the actual contract dictating when payments would be made-- think of it as a gentlemen's agreement between you and the lender: I know I owe the money but am unable to pay and don't qualify for a deferment (taking the loan out of the repayment status to where you are not legally required to pay for one of 13 reasons). It's not easiest concept to grasp but separate you writing a check from the status of the loan and hopefully it will begin to make a bit more sense.
So, a default on a Stafford basically means you have by in large ignored your obligation to repay for close to 10 months. Once your loan is in a default status, you have lost your protections afforded you under the terms of the prom note (think of this as the contract): you have neglected to meet your obligation under the contract for 270 days and now I have the right to ask for it all in one lump sum, you can't get it out of repayment (no deferment allowed as you waived that right as well). In short, essentially have waived your right to pay it over a certain period of time, monthly or defer it. My best advice is to be in contact with your lender and make sure they know how to find you at all times and what you need to do according to the contract you signed. Keep in mind it would really work out to be 180 days of grace (6 months) on top of the 270 and that's a loonnnggggg time before the world will end.
Alternative loans (not fed backed) have different timelines for default so if you have any of those, read the part that says "once you are X number of days past due, you are in default and now we have the right to do ______." Perkins, HPSL all have different lengths before they are considered in default.
All that said: you are correct in pointing out that your license could be in jeopardy if you default. When you default on a federal loan essentially the taxpayers have paid the bank for you and now the gov't collects the rest from you and has rights to do things that banks will never have (contact the license board, attach your wages, take you tax refund etc).
There was a Dr who complained that he couldn't pay back the loans because he couldn't practice... Logically one could conclude that it would be in everyones (Dr, gov't, taxpayers) if he could work as a Doc but that's not the case. The fact that he certainly worked long and hard at ignoring his obligations and then to add insult to injury, basically gave the taxpayers the finger (for lack of a prettier term). When I tell my students about the license part of defaulting, I tell them the story about the good Dr attempting to argue why he should be allowed to practice. My attitude: after the good Dr probably had 90 chances to make good on his obligation, blew every one of them he should go work at the Walmart and learn his lesson.
And can I just add: Dental kids rock (at least mine all do)
 
How is defaulting on your loan different from defaulting on your mortgage? The government should jump in to rescue all of us since we'll be the top income earners who'll pay for almost all the tax collection and social security benefit to keep this country afloat for awhile. Can the government afford to not let you have your license?
 
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