If I Defaulted On A Student Loan What Happens
If you have federal student loans and are having trouble paying them back, it’s important to know the consequences of defaulting on those loans. There are many things that can happen if you default on a federal student loan, including garnishment of your wages and tax refunds as well as lawsuits against your estate after death. However, there are also ways to avoid defaulting on a federal loan in the first place. This guide will explain everything from what happens when you default on a student loan to how to get out of default so you don’t have this problem in the future!
What is student loan default?
- What is student loan default?
Student loan default is when you don’t make a student loan payment for 270 days. Once this happens, the lender can take several actions, including repossession of your vehicle or wages garnishment. You’ll also be charged a late fee and interest on that late fee if it isn’t forgiven as part of an income-driven repayment plan like Income Based Repayment (IBR) or Pay As You Earn (PAYE).
Consequences of defaulting on student loans
- Avoiding default. The federal government can take action to collect on a defaulted student loan, but it’s best not to get there in the first place. If you feel like you’re falling behind on your payments and they’re becoming unmanageable, contact your lender immediately. There are options available that can help you avoid defaulting on your student loans, such as deferment or forbearance.
- Getting out of default. Once your loan is past due for at least nine months, it goes into default status—which means that the federal government considers them unpaid and will eventually charge interest on top of what’s already owed. It also means that if you have other federal loans in good standing (meaning they are being paid according to their terms), those loans could be held up from being disbursed until the debt is cleared up with the original lender (see below). In addition, if your credit score has taken a hit because of this situation then getting back into good standing with lenders may be more difficult than ever before!
- What happens if I default? A borrower who defaults on a student loan will most likely not be able to apply for future federal loans until their current debt is paid off or rehabilitated (see above). However, depending how old they are when they begin repaying these obligations may determine whether or not they qualify again once their debts have been satisfied: If someone under age 24 borrows money through Federal Direct Loan Program while attending college after July 1st 2007; then upon completion of studies (or 26th birthday) whichever comes later; all balances must be repaid within 20 years’ time (10 years’ grace period given before accruing interest). If however an individual wishes t take advantage of extended repayment plan beyond 25 years’ worth
How to avoid a federal loan default
- You can avoid defaulting by getting a job and starting to pay your loans.
- Borrow less money in the future.
- Find a co-signer who will agree to take responsibility for your student loans if you don’t pay them.
- Make more money using some combination of these strategies: finding work, working more hours or getting promoted, earning side income through freelance work or selling items on eBay, etc., so that you have more disposable income each month after paying for necessities like food and rent (and making payments on time). Look into government benefits like unemployment or Social Security—you may qualify even if you haven’t been working long enough yet!
Getting out of default
If you default on your student loan, it’s important to know that there are ways to get out of default and resume making payments on time.
To get out of default and make a payment:
- Contact the lender. When you contact your lender, let them know how much money you can pay each month and when. They may be able to help you develop a repayment plan that works for both parties.
- Pay what you can afford if no payment plan is available yet. If there is no agreement between yourself and the lender yet, but your situation has changed so that now you can afford some kind of payment, offer whatever amount that would restore positive cash flow meaning paying off as many existing debts with any extra funds before starting new ones such as credit cards or car payments etc… Once this has been paid off then start paying back on a regular schedule (monthly)
Defaulting on student loans can have serious consequences.
The consequences of defaulting on a student loan are severe, and they can affect your life in a variety of ways. It can be difficult to get a job, buy a house or car loan, get a credit card (or even an unsecured one), get professional licenses like teaching credentials or medical licenses. You might not be able to get a passport or security clearance for work if you default on federal student loans. And it can also impact your immigration status if you have defaulted on any type of federal education loan—even if that means deportation!
I hope this article has helped you understand the consequences of defaulting on a student loan. Defaulting can have serious and long-term effects on your credit score, making it difficult to buy a house or car or even get a job. To avoid going into default, be sure to make payments on time, stay in touch with your lender, consider consolidating multiple loans into one single payment plan and if all else fails contact an attorney who specializes in student loan issues for advice on how best to handle them.