What Could Happen If My Loans Are In Default?
You will be considered in default if you fail to make payments for 270 days (9 months). Perhaps the biggest penalty of defaulting on your student loans is that your credit rating is damaged. Your ability to rent an apartment, finance a car or house, or even to get a job, could hinge on your good credit.
In addition to reporting your default to credit bureaus:
- Loans may become immediately due and payable
- Income tax refunds may be withheld and applied to your loan balance
- Wages may be garnished
- State issued professional license or certificate may be withdrawn
- Loss of eligiblity for future federal student loans and other types of federal aid programs
- Loss of monthly repayment options and deferment
- Initiation of court action
Defaulting on student loans can be very expensive. Use a Default Calculator, provided by FinAid.org, to find out how expensive defaulting can be.