Default

Student loan default occurs when a borrower fails to make timely payments to the lender.

Defaulting on student loans has serious consequences. The loan may be turned over to a collection agency.
  • The borrower will be liable for the costs associated with collecting the loan, including court costs and attorney fees.
  • The borrower can be sued for the entire amount of the loan.
  • Defaulted loans will appear on the borrower's credit report, making it difficult to obtain other types of consumer loans. 
  • The borrower will be ineligible for any kind of deferments.

In addition, for Federal Student Loans:
  • Wages may be garnished.
  • Federal and state income tax refunds may be seized.
  • The federal government may withhold part of the borrower's Social Security benefit payments. 
  • The borrower will not receive any more federal financial aid until the loan is paid in full or arrangements are made to repay what is already owed by making at least six consecutive, on-time, monthly payments. 
  • A professional license held by the borrower may not be renewed.

Please Note:  Student loans are now generally not dischargeable through bankruptcy.

To Rehabilitate a Defaulted Student loan,