What happens if I default on student loans?

Concerns & risks

You were trying to get by, so you stopped paying your student loans, and now letters are piling up.

Default has serious consequences.

Causes & evidence

Default can hurt credit and lead to wage garnishment or tax refund offsets. See student loan repayment.

What to do

1. Contact your servicer now.
2. Ask about repayment options.
3. Look into rehabilitation if in default.

Common mistakes: Common mistakes: ignoring the letters. Defaulting on federal student loans can mean damaged credit, collection costs, and the government taking tax refunds or garnishing wages. Contact your servicer or the Default Resolution Group as soon as possible. Options can include loan rehabilitation or consolidation. Keep records of every call. If you get a notice that you're in default, read it carefully and note the deadlines. Getting out of default can restore eligibility for federal aid and repayment options. Contact your servicer even if you can only pay a small amount; there may be plans based on income. Don't pay anyone promising to erase your debt instantly.

Speed Man tip: Avoid paid 'debt relief' firms; help from servicers is free.

Wrap-up: Serious. Call servicer. Free options.