Defaulting on a Student Loan

Defaulting on a student loan has some similar consequences as with defaulting on other debt, like a credit card. However, other debts will be cleared from your credit seven years later, but some of the consequences of defaulting on a student loan can stay with you for a lifetime.

Credit

You will immediately see a drop in your credit score. You will most likely not be able to open any new accounts, and this debt will follow you for seven years on your credit report. If you defaulted on a federal loan, you will never be able to take out a federally backed mortgage, such as a VA or FHA loan.

Jobs

Your employer will look at your credit when offering you a job. If you have a student loan default, you may be denied the job. If you default on a federal loan, you will never be able to get a federal job.

Legal Consequences

If your loan is a federal student loan, you will never get rid of the debt. Your wages can be garnished, you can be sued for the balance and your tax refunds can be seized. A private lender also can sue for the balance of the loans.

 


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