What happens if I default on a student loan?
Updated October 6, 2022
If you default on a student loan, the consequences are severe. Here are a few examples of what may happen to you if you default:
- You lose eligibility for any additional federal student aid.
- You lose eligibility for deferment, forbearance, and repayment plans.
- Your loan will be reported as delinquent to credit bureaus, damaging your credit rating (This will affect your ability to buy a car or house or to get a credit card.)
- The IRS can take your federal and state tax refund to collect any of your defaulted student loan debt.
- 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.
- Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called?wage garnishment.
- It will take years to reestablish your credit and recover from default.
If you have defaulted on a student loan, contact your loan servicer or collection agency right away to explain your situation and find out your options for getting out of default. ?You may have several options including loan repayment, rehabilitation, or consolidation.
See more information about how to get out of default.