What happens if you don't pay your student loans

Your loan will become delinquent.

Your loan becomes delinquent immediately after you miss a payment and remains delinquent until your payments bring the loan up to date. After 90 days of delinquency, the lender will report you to the credit department, which brings down your credit score.

Your credit score is how banks, realtors, lending institutions, credit card companies, and various other institutions determine how likely you are to be able to pay back the money they've slow you to make a purchase. You can think of it like this: Your credit score is your value as a customer. People with high scores always pay their debts. Those with low scores have a history of late and missed payments, and high amounts of debt. A low score means a low credit card limit. You will also have problems renting a house, buying a car, or even trying to sign up for a mobile line. If you want to make all that easy, make your loan payments on time to improve your credit score. What Happens If I Don’t Pay My Student Loans?

Your loan will become a default.

Your Direct Loans are classified as default after 270 days of not making payments. When Perkins Loans defaults is at the discretion of the servicer. The consequences of non-compliance are severe.

• You will lose eligibility for federal financial aid, deferral, containment, and repayment plans.
• Collection agencies start calling you, and the full unpaid balance on your loan—plus interest—is due. Additionally, you have to pay collection costs that can amount to 18%.
• Your debt will increase with interest and late fees accumulate.
• Your credit rate will plunge even further, and it will take years to recover.
• You may suffer legal consequences from your provider.
• The government will get its money in any way possible. This may include having your tax refund withheld or having money garnished directly from your employer's wages.

In conclusion. If you are in default, contact your billing agency immediately, let them know your situation, and ask for help!

Getting out of default is hard.

If you are in default, there are three options to take back control of your student loan debt. These include the repayment, rehabilitation and consolidation of the loan. It's important to remember that the negative effects of default (such as a significant drop in your credit score) are not easy to remedy. You will be dealing with those consequences for years.

1. Loan Repayment: This consists of immediately repaying your student loan and any accrued interest in full. Obviously, if you've defaulted, you don't have the money to do it. This option will be best for people with generous family members.
2. Loan rehabilitation: You can work with the US Department of Education to develop a possible repayment plan for your federal loans based on your income. Then, you must voluntarily make nine on-time payments in a ten-month period. If your loan was sent to a collection agency, the agency must sell the loan back to your lender, who becomes the beneficiary. Once you've made your payments, your loan will no longer be in default and you'll re-gain federal student loan eligibility, deferment, containment, and your choice of loan repayment plans. If you default on your loans again, you will no longer have the opportunity for loan rehabilitation.
3. Loan Consolidation: This involves combining the outstanding balance of your federal student loans into a single loan (a Direct Consolidation Loan) with a fixed interest rate. First, you must make at least three consecutive, voluntary, on-time payments and discuss the loan with the US Department of Education. You can also choose to switch to an income-based repayment plan for your consolidation loans. Once you consolidate your loans, your new Direct Consolidation Loan will gain eligibility for federal financial aid, deferment, and containment.

The consequences of non-compliance are long-lasting.

Even if you manage to repay, rehabilitate or consolidate your loan and gain control over your payments, the consequences of delinquency and default will continue to haunt you. It takes much longer to raise your credit score than it does to lower it. You may find that as a result of missing your student loan payments, you will have difficulty:

• Buy or rent a house or apartment
• Being insurable or low rate of insurability
• Subscribe to utilities
• Qualify for credit cards
• Qualify for low-interest rate
• Buy or tend a car
• Activate a mobile phone contract
• Being hired for a new job
• Qualify for clearance authorization