What are the consequences of defaulting on my student loans?

Defaulting on student loans can have serious consequences. In California, the consequences depend on the type of loan taken out and the lender. Generally speaking, defaulting on a loan from the federal government may result in wage garnishment, meaning that the government can take a portion of your wages directly from your paycheck. This garnishment would likely go on until the debt is paid, and could also result in a tax refund being taken. If the debt is not paid, it could go to collections, resulting in a lowered credit score. In California, lenders may also pursue legal action against borrowers who defaulted on their loans. Defaulting on private student loans comes with similar consequences. The lender may be able to take legal action and pursue wage garnishment, tax refund interception, and they may also be able to add fees or interest charges to outstanding balances. Again, private lenders may also be able to place the loan into collections, resulting in a lowered credit score. Defaulting on student loans can be a difficult situation to be in and can have lasting consequences for the borrower. It is important to understand and adhere to the terms outlined in a student loan agreement to avoid defaulting. If a borrower is having difficulty making payments, they should contact the lender promptly to discuss repayment options.

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What are the consequences of defaulting on my student loans?

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