What are the consequences of defaulting on a private student loan?

Defaulting on a private student loan can have serious consequences in Pennsylvania. When you default, the lender can pursue legal action to reclaim the money they lent. The lender can sue you and get a court order to garnish your wages, which means deducting money from your paycheck for loan repayment. The lender can also collect money through asset seizures, liens, and foreclosures. Defaulting can also negatively affect your credit score, and remain there for up to seven years. For Pennsylvania residents, the consequences of defaulting on a private student loan also include the loss of the state tax benefit. In Pennsylvania, if you make a payment on your student loan, you may be able to deduct a portion of the interest paid from your state taxes. However, if you default on the loan, you will no longer be eligible for this tax benefit. Finally, if you are in default on a private student loan, you may no longer be eligible for any additional financial aid or for a federal loan consolidation. This means you will not be able to receive any additional federal or state funding for college and the loan will remain in default until you pay it off. Defaulting on a private student loan can have serious, long-term financial consequences. It is important to keep up with payments and to work with your lender to establish a repayment plan if you are having difficulty making payments.

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What are the consequences of defaulting on a private student loan?

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