Page 8 THE VILLADOM TIMES IV • May 29, 2013 Student loan debt and default are at historic highs. Before cosigning a student loan, remember that, if your child ultimately can’t keep up with the loan payments, the loan will become yours. If you can’t make the payments, your credit report will take the hit. Only private student loans, such as those through a financial institution, can require cosigners. Federal student loans do not require cosigners. These government-backed student loans typically offer lower interest rates and more flexible repayment plans. Investigate all the options before cosigning anything. If you or your child defaults on a student loan, the government isn’t just going to let either of you walk away. There are many steps it can take to recoup its losses: Don’t sacrifice your credit for a student loan • The Internal Revenue Service can hold onto any income tax refund to which you may be entitled until the student loans are paid in full. • The government can take a limited portion of the wages of a debtor in default. It can take up to 15 percent of your disposable income. However, it cannot take more than the equivalent of 30 times the current federal minimum wage. • The government can take some federal benefit payments (including Social Security retirement benefits and Social Security disability benefits) as reimbursement. The government cannot take any amount that would leave you with benefits of less than $9,000 per year or $750 per month, and cannot take more than 15 percent of your total benefit. • The government and private lenders can sue to collect defaulted student loans. Unlike other debts, there is no time limit on suing to collect student loans. If you’re having trouble repaying your loan, contact your student loan lenders to see if you can arrange an easier repayment plan. If you are having serious trouble paying, bankruptcy will not be an easy alternative. Student loans are virtually impossible to discharge, even after declaring bankruptcy, unless you can show that your loan payment is an “undue hardship.” This requires filing a motion with the bankruptcy court and presenting your case before a judge. If you have questions about your student loans, contact your CPA. If you don’t have a CPA, you can easily locate one at findacpa.org, the NJSCPA’s free, online service.