There are a lot of terms out there that may not make much sense, and defaulting can definitely be one of those. It’s important to have a firm grasp of how your student loan debt works and what it means when you can no longer make payments. There are many options out there for loan repayment, but it’s good to know what the worst case scenario is.
Let’s say that, even though you have a job, you find that it’s just impossible to make payments on your student loans. The debtors can certainly expect a lot of you, once that first year of deferment is up. It can be exceedingly difficult for many graduates to make ends meet, much less make payments on their loans.
In many cases, what ends up happening is people just stop making payments entirely. When there are no payments made for 270 straight days, this is considered defaulting on the loan. After this period of time, the lender may file a claim with the guarantor of the loan for the entire amount to be paid in full. The guarantor will have to make the payment and will now be responsible for getting the payments on behalf of the federal government. This may mean that the total amount owed rises drastically, your credit score could be affected, and your wages may be garnished. There are a number of other consequences that may come about as the result of defaulting, as well.
There are ways to help pay off student loans. If it becomes clear that you can’t make payments on your student loan debt and the loan company isn’t able to help you any more than they already are, contact a student loan lawyer for more information on your options for handling the debt in a reasonable way.