Student loans going on default is not good news for the person who is paying them, they could definitely get sent to a debt collector and burry you in their own fees to your balance. It is possible to get federal loans out of default but that’s not always the case with private student loans. People who default student loans do it because they are not paying back their debt as they previously agreed. This forces the loan issuer to get back their money in other possible ways. Missing on student loans or getting them to default can have a profound effect in your own personal economy. Our advice initially is to avoid getting to that point.
The most significant effect missing on student loans or sending them to default is a direct hit to your credit. These types of consequences can also include losing access to other types of federal financial aid and even get your wages garnished. Another thing that can happen is getting your tax refunds withheld and getting charged these incredibly steep fees by collection companies. But don’t depair, there is a way to get your credit back in shape if you default on your student loans.
How can I get my credit back on track if I default my Student Loans?
More consequences of defaulting your student loans can be based on your type of loans, either federal loans or private loans. With the federal loans, they are not considered on default until you’ve gone for nine months or more without paying them. However, private loans will go on default if you have spent three months or more without paying them. There are options such as student loan rehabilitation, student loan consolidation, refinancing, and hiring a consultant to help you navigate this difficult situation. Building back your credit after that won’t be easy but it’s definitely possible as well.
Read More: Student Loans: What happens if you default on loan?