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What happens if you default on a student loan?

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What Happens with Unsecured Loans? If you didn't put up any collateral for the loan, it is considered unsecured. If you're behind on payments, the lender may begin adding fees and increasing the interest rate. If the lender considers a debt in default, the loan may be turned over to a collection agency.May 28, 2015 read more

For most loans, default actually happens when you have not made a payment in 270 days. The distinction is important because of the legal consequences that can come with default on student loans. Consequences of Delinquency. When you are late paying your student loan, you may have trouble being approved to rent an apartment, getting a cell phone plan, signing up for utilities, or applying for other credit. read more

For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months). read more

The government can take ("garnish") a limited portion of the wages of a student loan debtor who is in default. It can take up to 15% of your disposable income. However, it cannot take more than the equivalent of 30 times the current federal minimum wage. read more

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