Our Best Answer: What are the consequences of federal student loan default?

Consequences of Federal Student Loan Default

• You lose eligibility for additional federal student financial aid.
• The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card.
• It may take years to reestablish a good credit record.
• You may not be able to purchase or sell assets such as real estate.
• Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan (this is called "Treasury offset").
• Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.
• Your loan holder can take you to court.
• You may be charged court costs, collection fees, attorney?s fees, and other costs associated with the collection process.
• If your school withholds your official transcript, upon your request the school must provide you with an unofficial transcript that might be accepted by another institution.

If you failed to make your payments on your federal student loan and now are in default, don?t let the consequences of default affect your financial future. Find out how to get out of default.