My Student Loan is About to Go Into Default! Do I Need To Worry?

Every year, more and more student loans head for default status. If you are worried about what actions could be taken against you for defaulting on your student loan, continue reading.

For a great number of student loans, if the loan has not been repaid for 270 days, in the case of a monthly installment loan, the student loan will be in default. Likewise, for most student loans, if a student loan has not been repaid for 330 days, in the case of other types of installments, the loan will be in default. The government has many recourses against you if you do not make your student loan payments and the loan defaults. Some of these recourses include:

– Any tax refunds you are expecting could be intercepted by the IRS. These refunds can be withheld until your student loan is paid in full. It may be possible to challenge this action.

– 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.

– Federal benefit payments meant for you can also be used to repay your student loan. Social security income is a form of federal benefit payment. Limits apply pertaining to how much may be taken.

– 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.

Another source of assistance is the Department of Education’s Ombudsman. This department may be reached at (877) 557-2575 or www.fsahelp.ed.gov. You need to make sure that you have already attempted to resolve this matter yourself prior to calling as the Department of Education’s Ombudsman will not be able to assist you otherwise.

It is never a good thing to default on your student loan. In addition to several recourses to obtain payment of the student loan, your default could be reported to the three credit reporting agencies which will immediately drop your credit score. If the government should decide to use a collection agency to obtain payment of your defaulted student loan, you will end up paying additional collection costs. Don’t allow this to happen! Try to negotiate a repayment plan so you don’t affect your credit history adversely.