Consequences of Default

Failing to make timely payments on a student loan will eventually lead to default. A student loan is considered delinquent the first day after the missed payment due date and leads to default after 270 consecutive days of delinquency. To prevent this from happening, you should:

  • Determine your first payment due date.
  • Make on-time payments.
  • Notify your loan servicer of any updates in your contact information, including address and telephone number.
  • Contact your loan servicer immediately if you are unable to make payments, regardless of the circumstances preventing payment.

If preventative action is not taken, there are several consequences that can result by defaulting on federal student loans. You may:

  • Have your federal tax refunds withheld and automatically applied to your outstanding loan balance.
  • Have your wages garnished by as much as 10-15% from each paycheck.
  • Be denied a professional license required for your profession.
  • Lose your eligibility for additional student loans.
  • Have collection costs added to your student loan balance.
  • Be required to pay your loan balance in full.
  • Experience a negative impact on your credit rating.