{"id":35804,"date":"2022-11-08T06:05:43","date_gmt":"2022-11-08T14:05:43","guid":{"rendered":"https:\/\/financer.com\/?post_type=wiki&p=35804"},"modified":"2025-02-20T23:16:19","modified_gmt":"2025-02-21T07:16:19","slug":"what-happens-if-you-dont-pay-student-loans","status":"publish","type":"wiki","link":"https:\/\/financer.com\/loans\/articles\/what-happens-if-you-dont-pay-student-loans\/","title":{"rendered":"What Happens If You Don’t Pay Student Loans?"},"content":{"rendered":"\n

Student loan debt can make a huge impact on Americans’ lives. With the total federal student loan portfolio exceeding $1.6 trillion<\/a> there are more than 43 million borrowers<\/strong> in debt. <\/p>\n\n\n\n

Many people think that not paying their student loans can have similar consequences to defaulting on a credit card<\/a> or personal loan<\/a>.<\/p>\n\n\n\n

But in fact, it’s much worse when it comes to defaulting on student loans.<\/p>\n\n\n\n

Currently, the total federal student loan portfolio totals more than $1.6 trillion<\/a> with more than 43 million borrowers<\/strong> in debt.<\/p>\n\n\n\n

Most students have federal student loans, and we know that the government has a lot of power when it comes to collecting outstanding debt.<\/p>\n\n\n

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The U.S. Department of Education (ED) offers a one-time debt relief as part of the Biden-Harris Administration’s student debt relief plan<\/a>. However, as a result of a court order, debt discharge is currently paused but applications are open.\u00a0<\/p><\/div>\n\n\n

We look at what happens when you don’t pay student loans and what you can do to avoid your loan getting into default.<\/p>\n\n\n\n

What Happens If You Stop Paying Student Loans?<\/h2>\n\n\n\n

If you stop paying on a federal student loan, the entire unpaid balance of your loan and any interest is immediately due. This is called acceleration.<\/p>\n\n\n\n

Additionally, if you are in default, the government can withhold your tax refund and up to 15% of your wages. The government can also offset (keep) your Social Security payments.<\/p>\n\n\n\n

If you have a private student loan and you’re in default, your lender can take legal action against you which could include wage garnishment, asset seizure, and collection calls.<\/p>\n\n\n\n

90 Days Overdue<\/h2>\n\n\n\n

Your loan will be officially delinquent if it’s 90 days overdue. This will be reported to all the major credit bureaus and your credit score will drop.<\/p>\n\n\n\n

This means you may not be able to get credit and if you are approved for a loan, it may come with higher interest rates.<\/p>\n\n\n\n

A bad credit rating can also have other consequences; potential employers can check your credit rating and service providers may also deny you a service or contract if they don’t deem you as creditworthy. <\/p>\n\n\n\n

Landlords may also reject your application for rental.<\/p>\n\n\n\n\t\t

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Your Account Goes Into Default<\/h2>\n\n\n\n

Your loan is in default if you haven’t made a payment in 270 days<\/strong>.<\/p>\n\n\n\n

At this point, your entire unpaid balance becomes due immediately. The government can take aggressive collection actions against you which we outlined above.<\/p>\n\n\n\n

Your student loan debt can also increase because of the late fees, additional interest, court costs, and attorney’s fees associated with default.<\/p>\n\n\n\n