There is a rapidly increasing number of defaulted student loans across the country. This article is devoted to explaining the government's recourses against you and what you can do about the situation.
After 270 days, a student loan can be considered in default, if it is a monthly installment loan. If the student loan is paid by a different installment method, the student loan can be considered in default after 330 days. The recourses which the government can use to obtain repayment of the defaulted loan are numerous. Following is a list naming a few of these actions:
- Refunds you are counting on could be taken by the IRS and held until your student loan is completely paid off. A challenge to this action may be possible.
- Your wages could be garnished by the government. The government can take a percentage, up to fifteen percent (15%) in some cases, of your wages in order to repay the loan. Again, it may be possible to challenge this garnishment.
- It is also possible for the government to take federal benefit payments and apply them to your student loan balance. Social security payments are a form of federal benefit payment, though there are several more. Thankfully, the amount which may be taken for repayment of your student loan is limited.
- It is less likely that the government will file a legal action against you as they have so many other forms of recourse. However, it is still an option they have open to them. Additionally, it is good to keep in mind that there is no statute of limitations regarding student loans. This means the government can file a law suit against you for repayment of the student loan at any time they would like. This can even be many years down the road when you have all but forgotten about your defaulted student loan.
You can contact the office of Student Loan Borrower Assistance at www.studentloanborrowerassistance.org for guidance on what you should do regarding your student loan in order to avoid the repercussions listed above.
Another source of assistance is the Department of Education's Ombudsman. This department may be reached at (877) 557-2575 or www.fsahelp.ed.gov. You need to make sure that you have already attempted to resolve this matter yourself prior to calling as the Department of Education's Ombudsman will not be able to assist you otherwise.
It is never a good thing to default on your student loan. In addition to several recourses to obtain payment of the student loan, your default could be reported to the three credit reporting agencies which will immediately drop your credit score. If the government should decide to use a collection agency to obtain payment of your defaulted student loan, you will end up paying additional collection costs. Don't allow this to happen! Try to negotiate a repayment plan so you don't affect your credit history adversely. - 29904
After 270 days, a student loan can be considered in default, if it is a monthly installment loan. If the student loan is paid by a different installment method, the student loan can be considered in default after 330 days. The recourses which the government can use to obtain repayment of the defaulted loan are numerous. Following is a list naming a few of these actions:
- Refunds you are counting on could be taken by the IRS and held until your student loan is completely paid off. A challenge to this action may be possible.
- Your wages could be garnished by the government. The government can take a percentage, up to fifteen percent (15%) in some cases, of your wages in order to repay the loan. Again, it may be possible to challenge this garnishment.
- It is also possible for the government to take federal benefit payments and apply them to your student loan balance. Social security payments are a form of federal benefit payment, though there are several more. Thankfully, the amount which may be taken for repayment of your student loan is limited.
- It is less likely that the government will file a legal action against you as they have so many other forms of recourse. However, it is still an option they have open to them. Additionally, it is good to keep in mind that there is no statute of limitations regarding student loans. This means the government can file a law suit against you for repayment of the student loan at any time they would like. This can even be many years down the road when you have all but forgotten about your defaulted student loan.
You can contact the office of Student Loan Borrower Assistance at www.studentloanborrowerassistance.org for guidance on what you should do regarding your student loan in order to avoid the repercussions listed above.
Another source of assistance is the Department of Education's Ombudsman. This department may be reached at (877) 557-2575 or www.fsahelp.ed.gov. You need to make sure that you have already attempted to resolve this matter yourself prior to calling as the Department of Education's Ombudsman will not be able to assist you otherwise.
It is never a good thing to default on your student loan. In addition to several recourses to obtain payment of the student loan, your default could be reported to the three credit reporting agencies which will immediately drop your credit score. If the government should decide to use a collection agency to obtain payment of your defaulted student loan, you will end up paying additional collection costs. Don't allow this to happen! Try to negotiate a repayment plan so you don't affect your credit history adversely. - 29904
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