5 Reasons Why You #LiterallyCantEven Default on Your Federal Student Loans

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Today’s college graduates have the most federal student loan debt out of any generation in history. As a fellow borrower and self-proclaimed captain of the student loan struggle bus, I feel comfortable saying that weight of our debt is hanging heavy on our shoulders – and our bank accounts. The impact of our student loans is everywhere and sometimes it truly feels like the easiest option would be to overlook the impending balance.

But, just like the pile of laundry that is building up on your floor, ignoring it will not make it go away. Defaulting on your federal student loans is one of the worst courses of action a borrower can take for his or her financial future – but before we get to that, lets breakdown some terminology:

What is a default?

A default is when a borrower misses 9 months or 270 days of payments, as stated in the promissory note – the binding legal document you signed when you took out your loan.

What happens when I miss a payment?

The first day after you miss a payment your loan becomes delinquent. The delinquency period continues until all payments are made to bring your loan current. After 90 days, loan service providers will report all delinquencies to the three major credit bureaus.

When does a delinquency become a default?

A default occurs when you fail to make payments for 270 days.

Now that we’ve squared away how to talk about defaulting, we can can move on to why you #LiterallyCantEven default on your student loans.

-There will be a hole in your paycheck, literally –  your wages could be garnished, which is a fancy way of saying you have the potential to lose up to 15% of your paycheck to the federal government. On top of that, you could experience offsets on your tax refund and social security.

-Fees on fees on fees – once your student loan is turned over to collections, you will be responsible for any associated fees, typically equaling 18% of the balance or more.

-Say bye-bye to the buffet of optionsdefaulting on your federal student loans means that you lose protections such as federal forgiveness programs, income-based repayment plans, forbearance, and deferment.

-Collateral damage to your credit score – a default, even if quickly resolved, will impact your credit score. Damage to your credit report will make buying a car or home, refinancing a mortgage, or even applying for a credit card more challenging.

-Bankruptcy is almost always off the table – although this isn’t typically the first financial choice to be made, it’s a extremely difficult when it comes to student loans. According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, no student loan – private or federal – can be discharged in bankruptcy.

To avoid defaulting on your federal or private student loans be proactive. Visit www.mystudentloancounselor.net for more information on federal student loans and how to avoid defaultYou can also read up on how to what happens when a private student loan goes into default here.


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About Andrew Weber, NACCC Certified Student Loan Counselor

Andrew Weber is a NACCC Certified Credit Counselor and a NACCC Certified Student Loan Counselor. He is the only certified student loan Counselor who specializes exclusively on private student loan issues in the US. He's helped over 2,500 borrowers drastically reduce their debts.

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