Dollars and Sense

What happens if I don’t make my student loan payment?
If you don’t make your student loan payment or make your payment late, your loan may
eventually go into default. If you default on your student loan, that status will be reported
to credit bureaus, and your credit rating and future borrowing ability will be damaged. In
addition, legal action can be taken to require payment through garnishment of wages and
withholding of tax refunds.
If you fail to repay your loans or set up other arrangements, you will end up in default.
Loan default results in the following consequences:
Your entire outstanding loan balance becomes due and payable immediately.
Your default will be reported to national consumer reporting agencies and will
affect your ability to obtain other consumer credit for up to seven years.
Your federal and state income tax refunds or other government benefit
payments may be withheld.
You will lose deferment, loan forgiveness and repayment options.
Your wages may be garnished.
You will be ineligible to receive any further federal and state financial aid.
You may lose or be denied a state professional license.
You may be sued.
Your student loan debt will increase because of the late fees, additional interest,
court costs, collection fees, attorney’s fees, and any other costs associated with
the collection process.
Understanding your loan agreement, staying on top of your loan information,
and making sure to contact your loan servicer if you are having trouble making
payments can help you avoid default.
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