Do I Need to Worry About Defaulting On My Student Loan?

Across the country, more and more student loans are ending up in default. To learn what the repercussions may be if you find yourself in this situation, read on.

After 270 days, a student loan can be considered in default, if it is a monthly installment loan. If the student loan is paid by a different installment method, the student loan can be considered in default after 330 days. The recourses which the government can use to obtain repayment of the defaulted loan are numerous. Following is a list naming a few of these actions:

- The IRS can intercept any income tax refunds you have coming to you and withhold these monies until your student loan is paid in full. If this should happen to you, you may be able to challenge the offset.

- Your wages could be garnished by the government. The government can take a percentage, up to fifteen percent (15%) in some cases, of your wages in order to repay the loan. Again, it may be possible to challenge this garnishment.

- It is also possible for the government to take federal benefit payments and apply them to your student loan balance. Social security payments are a form of federal benefit payment, though there are several more. Thankfully, the amount which may be taken for repayment of your student loan is limited.

- It is less likely that the government will file a legal action against you as they have so many other forms of recourse. However, it is still an option they have open to them. Additionally, it is good to keep in mind that there is no statute of limitations regarding student loans. This means the government can file a law suit against you for repayment of the student loan at any time they would like. This can even be many years down the road when you have all but forgotten about your defaulted student loan.

If all of these sound like nothing you want to go through, then it might be time to visit the web site of Student Loan Borrower Assistance at www.studentloanborrowerassistance.org. Student Loan Borrower Assistance can help answer a large range of questions with regard to defaulted student loans. They can also help you to find a solution to your problem.

To obtain addiitional assistance, you can contact the Department of Education’s Ombudsman at (877) 557-2575. This department also has a web site, www.fsahelp.ed.gov. Make note that the Department of Education’s Ombudsman office cannot assist you unless you have already attempted to resolve this issue on your own.

Defaulting on a student loan is not recommended in any way, shape, or form. In addition to the above-referenced recourses, the government can, and probably will, notify the three major credit bureaus, which will cause a substantial decrease instantaneously in your credit score. Additionally, your defaulted student loan could end up with a collection agency which would mean you would pay additional collection costs. Don’t let it get this far! Try to work something out today!

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