Defaulted Student Loans & You

by Kayc

Posted on 03/14/2019

Regardless of the type of loan you have, all student loans represent money that has been lent to you & affect your credit. Just one missed payment could send your credit score on a downward spiral.

Missed payments

The last thing you want to do is miss a payment. The severity of a missed payment will depend on how late it is & how often you tend to miss payments. Just one payment that's 30 days late could cause a drop of 90 to 110 points. Missing payments will also negatively affect the credit of any co-signers on your loans.


If you really let your student loan payments slip, you could end up in default. That is a much worse situation for your credit. For most federal student loans, your loan is considered to be in default if you are at least 270 days behind on payment. At that point, your entire loan balance becomes due in full for federal student loans. Private student loans typically fall into default status when you're at least 120 days late on your payment. When you're in default, you'll likely face collection activity & may be sued to collect the debt.


A garnishment allows debt collectors to use your income to pay your debts. This typically happens after you’ve defaulted on your loans. For student loans, the Debt Collection Improvement Act allows collection agencies who are under contract with the US Government to collect up to 15% of disposable income to repay debts owed to the U.S. government. The Higher Education Act allows collection agencies in contract with the Department of Education to collect up to 10% of disposable income.

Home Buying

It is important to know that federal student loan debt is not dischargeable in a bankruptcy nor does a statute of limitations apply. Therefore, the debt will not disappear over time as is the case for some other types of debt. For this reason, consumers who have defaulted on their federal student loans will be unable to secure an FHA mortgage loan. Buying a home may have to be put off until you can resolve any default issues.

Regardless of your situation, it is important that you know what your options are.

You may find you're eligible for COMPLETE STUDENT LOAN FORGIVENESS OR DISCHARGE! A 10-minute phone call is all you’ll need to determine what payment programs are available so you can stop stressing & start saving! Call Today for help with your Student Loans (844) 499-LOAN