Understand the Consequences of Default

Discover why defaulting on your student loans can negatively impact your life.

Default occurs when you have made no payments on your student loan for at least 270 days. When you default you have violated your loan agreement, and the lender or servicer can request immediate payment in full.

Why should you care? Because default can have long-lasting, negative consequences on your financial future!

What are the consequences of student loan default?

  • Higher interest or denial of credit — Your credit can be seriously damaged if you default on your student loan. This damage to your credit will affect the interest rates on future loans you are offered and can result in denial of credit opportunities outright.
  • Responsible for collection fees and costs — When you have a defaulted loan, you are charged additional collection fees and costs associated with your loan collection that can substantially increase your loan balance.
  • Wages garnished — Under wage garnishment, a certain percentage of your income may be withheld by your employer and sent to your loan holder to pay for a defaulted student loan.
  • IRS funds withheld — If you default on your student loan, your loan holder has the authority to seize your tax refund and other federal payments to which you are entitled to apply toward your outstanding loan balance.
  • Lottery winnings withheld — If you win the lottery, the winnings can be seized and applied toward a defaulted loan.
  • Legal action — In extreme circumstances, the holder of a defaulted loan may take legal action against you to force you into repayment.
  • Professional license withheld — You may have your professional license (e.g., cosmetology, real estate, medical) withheld. To have the license reinstated, you must have an established repayment arrangement with your loan holder before a release letter will be sent to the licensing agency.
  • No more federal financial aid — If you default on your student loan, you will be ineligible for further federal financial aid unless your eligibility is reinstated.

So what's stopping you?

  • The monthly payments are too high for my income.
  • I need to wait a while before I begin repayment to save some money.
  • I can't find a job.

Whatever the reason is for not making your monthly student loan payment, you should contact your lender or guaranty agency. They will work with you to arrange a repayment option that is best for your financial situation.


By successfully managing the repayment of your student loans, you can meet your obligations, avoid financial problems, and help assure a clean financial record for your future.

Need Help?

If you are having difficulties repaying your student loan, contact your lender. TG Default Prevention can offer additional assistance by phone at (800) 338-4752, or email at prevent.default@tgslc.org.