{"id":109936,"date":"2021-03-18T18:15:16","date_gmt":"2021-03-18T18:15:16","guid":{"rendered":"https:\/\/fin2me.com\/?p=109936"},"modified":"2021-03-18T18:15:16","modified_gmt":"2021-03-18T18:15:16","slug":"how-can-borrowers-recover-from-student-loan-default","status":"publish","type":"post","link":"https:\/\/fin2me.com\/economy\/how-can-borrowers-recover-from-student-loan-default\/","title":{"rendered":"How can borrowers recover from student loan default?"},"content":{"rendered":"

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Student loan default can have serious consequences. You may be able to avoid default by choosing the right payment plan or refinancing to reduce monthly payments.<\/span> (<\/span>iStock<\/span>)<\/span><\/p>\n

If you don't make your loan payments every month, you could fall into student loan default. Defaulting on student loans affects many aspects of your financial and professional life. But there are steps you can take to avoid it including changing your payment plan, talking to your loan servicer about forbearance, or refinancing private student loans (it likely doesn't make sense to refinance federal student loans amid current benefit extensions).<\/p>\n

Before you're in need of credit repair, consider other options with your student loan servicer. Credible can help you explore options for refinancing student loans and reducing your monthly payments. Visit Credible today to compare student loan refinancing rates and see how your payment could be affected by refinancing.<\/p>\n

What is student loan default?<\/strong><\/p>\n

Student loan default occurs when you miss too many payments. Considering the significant student loan debt many Americans currently carry, this can become a common occurrence.<\/p>\n

Specifically, if you don't make a loan payment for 270 days on your Direct Loans or Federal Family Education Loans (FFEL loans), you'll be considered in default. With private student loans, the specific number of payments you're able to miss before entering student loan default varies by lender. It could be as few as three payments.<\/p>\n

What are the consequences if I default on federal student loan payments?<\/strong><\/p>\n

If you default on federal student loan payments, there are serious repercussions.<\/p>\n

Federal student loans default affects a broad array of items. You could become ineligible to receive federal loans in the future, and the full balance on your current debt will become due immediately. You won't be able to switch repayment programs or put loans into forbearance or deferment. Your credit score will be damaged; the government could seize tax refunds or federal benefit payments, and your wages could be garnished. You could also be sent to collections, and your school could withhold your academic transcripts.<\/p>\n

It's also possible that your professional license (if you have one) could be suspended.<\/p>\n

What are the consequences if I default on private student loan payments?<\/strong><\/p>\n

When you fall into student loan default on private student loans, there are also serious repercussions.<\/p>\n

Your credit could be damaged by reports of default and your lender will likely send you to collections. Your entire loan balance can become due, and you could face legal action to collect that may lead to a court order to garnish wages.<\/p>\n

How do I recover from student loan default?<\/strong><\/p>\n

When you default on federal student loans, options include:<\/p>\n