What are the consequences of defaulting on student loans?

Defaulting on student loans is a serious matter that has consequences that can affect an individual’s personal finances for years, even after the loans have been paid off. In California, some of the consequences of not making payments on student loans include wage garnishment, offset of federal and state income tax refunds, and potential litigation. Wage garnishment is when creditors are allowed to take money from a person’s wages to pay back a loan. This means that the individual’s wages are taken directly from their paycheck—a percentage of their check is taken and given to the loan provider until the full balance of the loan is paid off. Another consequence of not paying back student loans is the offset of federal and state income tax refunds, meaning that part or all of the tax refund that is returned may be taken and given to the loan provider. If these consequences are not enough to convince the individual to begin making payments on their loan, the loan provider may also pursue litigation, which can have serious long-term implications. Litigation involves taking legal action against the individual and can result in a judgment being placed on the individual’s credit report, potentially leading to difficulty in obtaining credit or making large purchases. Defaulting on student loans in California can have serious, long-term consequences, and it is important to make sure that all payments on loans are made on time and in full.

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What are the consequences of defaulting on student loans?

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