What happens if I default on my federal student loans?

Defaulting on federal student loans can have significant and lasting consequences. When a borrower defaults, typically defined as failing to make a payment for 270 days or more, the lender may take various actions to recover the owed amount. This may include reporting the default to credit bureaus, which can negatively impact the borrower's credit score and hinder their ability to secure other types of loans or even housing in the future. In addition, once a borrower defaults on their federal student loans, the entire balance of the loan, including interest and collection costs, may become immediately due. This means the borrower must pay the full amount owed in one payment rather than adhering to the original repayment schedule. Moreover, the government has specific legal authorities to collect the debt; they may garnish the borrower's wages or withhold tax refunds and Social Security benefits. Fortunately, borrowers may have options for rehabilitation and loan consolidation to regain good standing. Rehab programs allow borrowers to make a series of consecutive, on-time payments to bring their loans out of default. The U.S. Department of Education provides information on these processes, and it is advisable to consult the appropriate web resources for detailed guidance and eligibility criteria. Understanding these processes can help borrowers navigate their situations more effectively.