wage garnishment

tax return confiscation

no hope of buying a house

no hope of financing a car

no future federal financial aid

bad credit

The amount you owe doubles due to fees and interest.

Filing bankruptcy will not remove this debt, dying will however.

If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

¤National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.

¤You would be ineligible for additional federal student aid if you decided to return to school.

¤Loan payments can be deducted from your paycheck.

¤State and federal income tax refunds can be withheld and applied toward the amount you owe.

¤You will have to pay late fees and collection costs on top of what you already owe.

¤You can be sued.

Obviously, you don’t want to let your loan go into default. However, should this happen, find out what options are available. Click on this link to our Guide for Defaulted Borrowers to find comprehensive information developed by the Department’s FSA Collections section. Clicking on various tabs within that publication will give you information about how to remove your loan from default, what to do if you have a dispute about your loan’s default status, and how to get answers to questions you might have.

Default Definition: a state of delinquency on student loans occurring after you have violated the terms of your contract, e.g. have not made a payment or arrangements for at least 270 days. Student loan default remains on your credit report for seven years.

You have terrible credit for years and can’t get other loans, like for a home, or credit cards. your credit checks for apartments won’t be approved.