Just like other forms of credit, including credit cards, mortgages and car payments, defaulting on your student loan can carry some very serious consequences.
However, recent research suggests that many young consumers do not understand the backlash that can come from defaulting on student loans.
One of the big things about growing up and becoming an adult is that you must learn to pay back what you borrow and even if they are not as exciting as choosing a new car or buying your first house, but student debts still need to be repaid.
The majority of young consumers are not aware of what actually happens if you default on your student loan. It is important to view a student loan as equal to any other type of debt. It is no less serious and default carries serious financial ramifications.
It must be paid back in order to avoid negatively impacting your credit score and making a mess of your personal finances. The best way to stay on top of your student loan is to set yourself a reasonable but strict budget and use it to live within your means. This sometimes mean having to go without some non-essential things, but that is all part of financial responsibility. The bills have to come first.
Defaulting on your student loan can not only affect your credit history and stop you from getting credit later in life, but it can also result in you having to face calls from collection agencies. This will bring a sense of unease when thinking about money matters.
The Department of Education is also able to step in and lay claim to things like tax rebates and social security benefits to cover the missing payments on the loan account. They can also garnish your paycheck if you have a part time job. Individuals who default on student loans can also risk the possibility of being sued or losing professional licensure.
It is important to ensure that you do not fall behind in your loan obligations for your student loan and any other debt which you may be carrying. It is so important not to fall into the trap of treating a student loan as less important than more “grown up” credit such as car loans or mortgages. The average four year college education can cost around $20,000 so it is a very serious debt which must be repaid.