what happens if you dont pay your student loan?

Question

my cousin just finished getting a BA in web design and still owes $4000. She is saying screw it and isnt going to pay. what happens then? Does it just stay on your credit report for 10 years, then go away? or what? im curious about it.

Answer 1

She can say that now, but the government doesn't forget about student loan obligations. This will haunt her forever, so she better make arrangements to get it paid. She will have a very difficult time getting a home, car, etc., if she has defaulted on student loans. NOT smart thinking for a recent college grad!!!

Answer 2

1

Answer 3

If the loan defaults, it will be assigned to the guarantor, usually DOE in your state. Collection will continue until the debt is paid,including any fees. Eventually, the guarantor will contact the IRS and flag your SSN. Any IRS refunds will be gien to the garantor until the debt and collection fees are paid. The student will be unable to obtain any further student loans, even with a co-signer nor qualify for any grants.
Student loans are not dischargable in BK. Not to mention, the damage on your credit report, which many employers, banks and insurance companies check before offering a job, opening an account or insuring your home, car or life.

In short, DOE will get their money now or later so it would be best to pay it now. Most loans can be made current by contactig the servicer and asking for a deferrment or forebarnce (sp).

I worked for SLMA for a few years and believe me, they always got their money.

Answer 4

Lending institutions, especially banks will get their money, it may not be now, but sooner or later your cousin will have to pay and if it is later more interest is added on and she could pay double her loan. On very late loans, the lenders use collection agencies and these agencies can be very vicious. Nowadays your prospective employer, landlords and lending institutions can see that your cousin is a deadbeat. She is the reason why it is so hard for people in need and that have every intention to pay back their loans to get student, cars and house loans. Non payments and breach of contracts affects us all in some way or another. So tell your deadbeat cousin to pay her student loan.

Answer 5

There can be ramifications beyond your credit report....
Depends on what kind of loan but I found this...
Default
If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.
You would be ineligible for additional federal student aid if you decided to return to school.
Loan payments can be deducted from your paycheck.
State and federal income tax refunds can be withheld and applied toward the amount you owe.
You will have to pay late fees and collection costs on top of what you already owe.
You can be sued.

http://studentaid.ed.gov/students/public...

Answer 6

It doesn't matter if the loan is 5 years old or 10 years old or 20 or more. It was still a loan given to her and FOR THE REST OF HER LIFE she will be expected to pay it off. It doesn't go away.

1.Wage garnishment
2.tax return confiscation
3.default fees (a loan of 4000 will be a loan of 15000 or more because, once in default, they can charge default fees) - kind of a bummer when they start garnishing your wages.
4.No chance of buying a house. friend of mine was literally packing to move (she had been preapproved and everything) and an old student loan stopped them.
5.Bad marks on your credit report that won't go away even if she starts making payments on it. She still let it get in default, and that is what the credit bureaus keep track of.
6.Can't get federal fin aid while in default.

Answer 7

Well you can't refuse. Sorry not an option. Jail,garnishment of wages leans and refunds from tax leans. Sounds like a lot of fun. Every thing you own will be theirs and they don't care if you have no car now. So there you have it. But there is HELP now. Right now our government is offering a pay off of student loans. They realize this is a big problem. So start looking for help now. You don't want all those great prizes they will give you for non payment.

Answer 8

Not only does it stay on your credit history, but a student loan is government controlled, and if you file a tax return, will take funds out of your return every year until it's paid. Even if you decide not to file a return, eventually, you will and it doesn't matter where you work as long as you pay taxes, they can track you. So tell her, she will be paying whether it's sooner or later.

I finally got tired and worked out a payment plan so that I can keep my tax (State portion) return, and I've never forgotten that lesson.

Answer 9

I was put in default on my student loan while I was still in school because my financial aid office didn't send in a form. Within one month, the national student loan office started harassing me several times a day with threatening phone calls and letters. I had to start paying for my student loan while I was still working to pay for school! Even then, they kept harassing me. I started working full time during my last semester in school and paid my whole loan off, and they still kept bothering me for about three years until I hired a lawyer. I would suggest not screwing around with paying off a student loan. I paid mine off really early and they were still mad at me.

Answer 10

what Sharon M. said is true, there are also other consequences, depending on what kind of loan you have. like:
academic transcripts being withheld
loan could be turned over to a collection agency (you don't want that!)
Your total debt may be increased by late fees, additional interest, collections fees, court costs, attorney's fees and other costs.
Very, Very bad idea not to pay. This $4,000 dollar debt could easily ruin her future career. She did all of that work to get a BA and have a good life for herself and now she is going to throw it all away.

you can go to the website from where she got her loan, and look up defaulting on a payment. There should be a list of consequences for this, I guarantee you they are not good.