Not allowed to restructure student loan without indemnity

Hi,

I took out a student loan when I was in college worth €6,500. The way the loan was drawn up at the time was that it would be interest free for the large majority of the time I was in college and then I would have to start repaying it just before I finish college.

The loan is expired on the 29th of July and I am due to graduate at the start of september. I have yet to secure a job and I am focusing mainly on finishing writing up my thesis. The loan was drawn up as an interest free loan and I was told I would have to restructure it on the 29th of July.

The loan required no security at the time. When I called today however I was told that indemnity would be required to restructure the loan or have some form of job contract. I cannot ask my relations to indemnify for this, they don't have the money. I feel cheated that I was told there would be no security required for this loan but they never mentioned that it would be required when it is restructured.

Have a look at the terms and conditions of the loan.

They presumably are not imposing new conditions on it which were not in the original contract?

I am not familiar with such loans. But presumably you pay it off from your income when you get a job? They will start charging interest when you graduate so the quicker you pay it off the better.

Brendan

Thank you. The loan that was drawn up originally was an interest free loan for €6,500 and it is expiring at the end of this month and a full repayment is required. This loan also had on it that no idemnity was required. I have been told now that this has to be restructured into a new loan, it would be required to either have indemnity or a copy of a contract of employment.

sorry i forgot to mention that i was never told that the restructure would require a guanator

Well, if the loan is due to be repaid, and you can't repay it, you sort of have to accept their terms for a new loan.

It seems odd to me that a student loan would need to be repaid in full on graduation.

Brendan

Sorry you're messages are a little confusing. In your first post you state that you would begin paying towards the end of the term and in your second post that it was to be paid off in one lump sum.

Either way, by not paying off the money you have broken the terms of the original agreement if I'm reading it correctly, therefore it is you that have changed the terms by not paying off so it would seem fair to me that the Bank can now also change the terms as it is really a new loan.

Could you get a loan from a different bank that do not require a guarantor and use that to pay off the first loan?

@Brendan: Thanks for the response. Yes it seems that I have to accept their new conditions on the new loan and have it gauranteed. Yes it is actually odd how they drew up the loan, I think it was because the old one wasnt interest bearing and the new one will be and they didnt exactly give me enough time to graduate but I think that's due to the max term on the interest free loan, I had to repeat one year and I'm also just finishing my masters.

I have discussed with my father and he has decided to guarantee it for me even though it's an avenue I really didnt want to go.

@Derek: Thanks for the advice and sorry for making this confusing, it's a bit of a mess! I havnt defaulted on any payments yet, the payments are due to start at the end of this month when the term interest free loan has expired and the loan is restructured. That single repayment was a bit confusing. It was in the contract of the interest free loan but I think it was just there for completeness, the bank has no problem restructuring once i have a guarantor.

Before u get your father to sign off on it, is his house at risk if you default?
If you don't have the mula to repay it and you don't get a guarantor what will they do?

As for this " It was in the contract of the interest free loan but I think it was just there for completeness" LOL

On the face of it, as you seem a little naive here re debt and the fact that it needs to be repaid, I would have major concerns about having your father sign something that perhaps neither of you fully understand.

The bank has said that either I pay the loan in full or re-structure with a guarantor. If I do neither they said I will be defaulting on the loan.

ircoha said:

Before u get your father to sign off on it, is his house at risk if you default?
If you don't have the mula to repay it and you don't get a guarantor what will they do?

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Just to be clear, all documentation that I have states that loan will have to be paid in full at the end of this month. There was no guarantor on this loan for the last four years. There is no mention anywhere of re-structuring the loan after 4 years in the agreement, that was always done verbally.
I have every intention of paying the debt but I now have to get a guarantor and that's the part I'm not happy with