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6 Scary Consequences of Student Loan Default

Did you know that more than 10 percent of students default on their federal student loans?1  What are they thinking??!!??

Don’t they know what could happen?

If you stop paying your federal student loan, after 270 days it will be considered in default. And then uh-oh, watch out! Here are 6 scary examples of what could happen next.

Debt collection: Imagine getting embarrassing and harassing phone calls and messages hounding you about the money you owe on your student loans? It could happen. Private lenders and the Federal Government hire private contractors to collect unpaid debt. They are all supposed to adhere to strict guidelines designed not to harass you but not everyone plays by the rules.

Increased costs: The longer it takes you to pay off your student loans, the more interest will be charged, increasing your overall costs. Additionally, you can be charged penalties and late fees. There’s no escaping your responsibility. In most cases, even declaring bankruptcy will not eliminate your debt unless you can prove undue hardship.2

Deferment rights: Under certain circumstances, you could be eligible for loan deferment –which means you’d get to delay your payments. But only if you haven’t defaulted! Defaulting on your note could also jeopardize your right to future grants and loans for your education. Don’t let a bad financial decision today risk all your tomorrows.

Wage garnishment: The Federal Government can contact your employer and have money taken directly from your paycheck. They don’t even need a court order! And the Government can take up to 10 percent of your disposable wages –that’s what’s left after normal deductions like payroll taxes.3They can also take any tax refund you thought you had coming.

Family money: Did someone co-sign for your private student loan? If they did and you default, it’s not just you who is responsible. Your parents, grandparents or whoever else helped you out could now face the same consequences as you –from those nasty debt collector calls to wage garnishment. And if they have assets you don’t—like a home—it could also be attached to satisfy your debt.

Credit score: Don’t you want a future where you can buy a car, rent an apartment, or maybe even buy a house? You put all that on the line if you default on your student loans and destroy your credit. A good credit score can save you money, but borrowing rates increase significantly when you have a bad credit score. Don’t let this happen to you!

At Charter College, we care about you and your financial future. If you have questions about your student loans, contact our Education Loan Specialists at 1.866.315.0391 and we’ll help answer them.