Since the start of the economic recession in the late 2000s, an epidemic of student loan defaults has swept the country. Many students who might previously have been able to find solid jobs after graduating from college have been forced to take low-paying positions that don't require higher-education credentials. Desperate to save money, many thousands of these recent graduates have moved back in with their parents or shacked up with friends in overcrowded apartments. Although the economic recovery is now in full swing, the market for jobs simply isn't expanding fast enough to accommodate all of the graduates who were "left behind" during the recession. It may be years before the situation resolves itself.
In the meantime, the student loan crisis isn't going away. If you're a recent college graduate, you probably have plenty of questions about your debt load. For starters, you may worry about the consequences of non-payment on your student loans. Even if you have a decent job, your debt burden may be difficult to manage. Depending upon where you live, you might have no choice but to earmark the bulk of your earnings for necessities like food, clothing and rent.
Unfortunately, you run the risk of defaulting on your student debts. In order to forestall a credit-damaging default that could prevent you from securing adequate housing or credit facilities for years to come, you may wish to get out in front of your debt burden with a program of student loan consolidation. The Department of Education and certain private entities offer such programs.
Before you enroll in a debt consolidation program, you'll need to check on the status of your loan. If your loan remains in good standing, you'll be free to proceed with the consolidation process. If your loan is considered delinquent or has officially gone into default, you'll need to check with the appropriate authorities to determine whether your federal tax refund has been affected.
Defaulted federal student loans are often "offset" by tax refund seizures. The "offsetting" process simply involves the full or partial seizure of the delinquent borrower's federal tax refund. Since this action is often taken without notice, the IRS operates a hotline for individuals who believe that their refunds have been seized. The hotline can be reached at 800-304-3107. If your refund has been seized to offset a portion of your defaulted student loan's balance, you can still consolidate the loan's newly-reduced balance.