What Happens If I Default on My Student Loans?
More than 1.1 million Americans defaulted on their federal student loans for the first time last year. When you default on federal student loans, the consequences are severe and can affect several areas of your life. You may experience consequences that include: Wage garnishment : The Department of Education can garnish up to 15 percent of your disposable pay. Unlike private collectors, the Department of Education does not need a judgment to garnish your income. Your balance increases : Your remaining balance immediately becomes due once you default. Unpaid interest and collection fees may also be added to your balance. The latter is especially true for borrowers with FFEL loans. Reduced credit score : Loan servicers will report you to the three credit agencies if your loans remain delinquent for too long. You are also reported to the three credit agencies after defaulting. This can significantly lower your credit score. Having a low credit score can make it more difficult to secure