What Is the Worst That Can Happen If You Default on a Government Student Loan?
You will ruin your credit. Your loan will balloon to a huge number, with the increased interest rate you get, plus fees and penalties – I’ve seen $50k loans go up to $250k, so this is not something to be trifled with. They will garnish your wages – I’ve seen them take over half a person’s paycheck. They will take your income tax refunds. They can, and will, even take your social security once you’re old. In addition, if your loan required you to have a co-signer, such as your parents, they’ll go after THEM. This will ruin their credit, etc. It is, in other words, very bad news. And student loans can’t be discharged via bankruptcy, so you literally can’t get rid of this debt. Talk to the loan company. See if you can do something. Your options include extending the life of the loan from 10 to 30 years, to bring the payment down to a level you can handle. Putting the loan in forebearance due to economic hardship. Etc. All of these choices have repercussions, but these options are far bett
