You go into a default status on your student loans whenever you fail to make payments on your loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. Your school, the financial institution that made or holds your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default:

• National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car, a house, etc.
• You will be ineligible for additional federal student aid if you decide to return to any school.
• Loan payments can be deducted from your paycheck.
• State and federal income tax refunds can be withheld and applied toward the amount you owe.
• You will have to pay late fees and collection costs on top of what you already owe.
• You can be sued.

Clearly, you don’t want to let your loans go into default! However, if this does happen, there are steps you can take to remedy the situation. Visit the Guide for Defaulted Borrowers at to find comprehensive information developed by the Department of Education’s Collections section. You can click on various tabs within the site to get information about how to remove your loan from default, what to do if you have a dispute about your loan’s default status, or how to get answers to any questions you might have.