Thousands of graduates across our country are struggling to pay their student loan debt. Unfortunately, many see it as a hopeless endeavor and eventually give up. However, sticking your head in the sand and ignoring your student loan debt can have severe consequences.
The longer you go without paying your loans, the more your debt will snowball. Interest will continue to accrue and your loan balance will grow even larger. If your account is placed into collection, additional fees and costs will be added to the total amount you owe.
Failure to make loan payments will be submitted to the credit reporting bureaus. Late payments and loan defaults wreak havoc on your credit score. Having a low credit score can make life difficult because you will have a hard time qualifying for mortgage loans, vehicle loans, and credit cards.
If your federal student loan remains unpaid for 270 days, most federal loan lenders will consider it to be in default. Once your loan is in default, the collection efforts against you can get severe. For example, if your federal student loan is in default, the government can seize your tax refund. The government can also garnish up to 15% of your disposable wages without having to file a lawsuit against you first. Of course, you can be sued for the full balance owed on your student loan.
If you have a private student loan, the promissory note you signed governs your late-payment status, as well as when the loan is considered to be in default. It is important to note that private loans may consider missing a single payment as a default. Although private student loan lenders cannot seize your tax refund, they can file a lawsuit against you. Once a judgment as been entered against you for the balance on your student loan, the lender can take any collection action allowed under state law.
In short, don’t ignore your student loan debt. It will not magically go away. There is no statute of limitations on federal loans, which means collection actions can be taken against you for the rest of your life. State law applies a statute of limitations to private loans, but rest assured they will pursue you diligently for as long as they can.
Please keep in mind that every matter is different. If you have questions about your student loan debt and you would like to schedule a no-cost consultation to discuss your options, please contact our office by completing the form on this website or calling us at (954) 516-2566.