Hey, I’m Tate. I’m a student loan lawyer. And I’ve helped hundreds of people get out of default. I built this collection of learning hubs so you have access to the information you need to deal with your defaulted student loans.
- How to get student loans out of default
- How can I get out of default fast
- What happens if you default on federal student loans
- What happens if your student loans go to collections
- Can the Department of Education garnish your wages
- Should I consolidate a defaulted student loan
- Can you stop student loan wage garnishment once it starts
- Can you go to jail for student loan default
How to get student loans out of default
There are three ways to get federal student loans out of default:
- Loan consolidation
- Loan rehabilitation and
There are two ways to get private student loans out of default:
- Make the payments you missed (or request a forbearance)
- Negotiate a settlement
Click here to learn How to Get Student Loans Out of Default?
When do you default on student loans?
As a reminder, you default on a federal student loan when you go more than 270 days without making a required payment. You default on a private student loan typically when you miss one payment. (Your loan servicer may say you’re delinquent and in danger of defaulting.)
How can I get out of default fast?
The fastest way to get your federal student loans out of default, aside from settlement, is to apply for loan consolidation. The loan consolidation process takes 2 to 3 months to complete.
Loan rehabilitation, on the other hand, takes 3 times longer (9 months).
Click here to learn How to Get Out of Student Loan Default Fast
What happens if you default on federal student loans?
When you default on federal student loans, you’re no longer eligible for certain benefits. You lose access to deferment and forbearance, income-driven repayment options, and loan forgiveness programs. Also, after you default, the government can issue an administrative wage garnishment, offset your tax refund, and offset your Social Security benefits.
Plus, collection fees can be added to your loan balance.
Basically, all bad things happen when you default on federal student loans.
Click here to learn How to Protect Your Money After Federal Student Loan Default.
What happens if you default on private student loans?
When you default on private student loans, typically the loan balance accelerates and the full balance becomes due. At that point, your options to get a private loan out of default are limited to paying the balance in full or negotiating a settlement.
Click here to learn more about Negotiating Settlements for Private Student Loans.
What happens if your student loans go to collections?
When a federal student loan goes to collections three things happen:
- Collection fees are added to the loan balance
- The government can garnish your wages, take your tax refund, and garnish your Social Security benefits
- The collection agency starts calling you, your job, and your family members repeatedly.
When a private student loan goes to collections, the only thing that happens is that you get collection calls nonstop. You can’t be garnished or have money taken from your bank account for private student loans until you’re sued. Typically, private student loan holders wait until the statute of limitations is going to expire before they sue.
Click here to learn What Happens When Your Student Loan Goes to Collections?
Can the US Department of Education garnish your wages?
The US Department of Education can garnish your wages. And they can do so without a court order. The government has the power to garnish your wages after you default using its administrative wage garnishment powers.
Typically, the government hires a private collection agency to handle the garnishment.
Before they start garnishing your wages, they’re supposed to send you a notice that gives you 30 days to respond. If you didn’t get the notice, chances are it was sent to the last known address the government had on file for you. Under the rules, mailing it to the last known address is acceptable notice.
Click here to read this Guide to Administrative Wage Garnishment for Defaulted Federal Student Loans
Should I consolidate a defaulted student loan?
You should consolidate a defaulted federal student loan if you need to get out of default fast or you have completed the loan rehabilitation program once before. Consolidation gets you out of default in a few weeks and lets you qualify for better repayment plan options, but it comes at a cost. Specifically, your loan balance will be a lot higher due to the capitlization of collection fees and interest.
If keeping your loan balance low matters most to you, consider the loan rehabilitation program (if you’re eligible).
Click here to learn Should I Consolidate My Defaulted Student Loan?
Can you stop student loan wage garnishment once it starts?
You can stop a student loan garnishment once it starts by entering into a loan rehabilitation agreement. The loan rehabilitation program won’t stop the garnishment right away. Instead, it will stop the garnishment after you make 5 monthly payments on top of the money being garnished from your check.
Click here to learn How to Stop Student Loan Wage Garnishment After it Starts
Can you go to jail for student loan default?
You cannot go to jail for defaulting on your student loans. You can, however, go to jail if:
- You’re sued for a student loan
- The loan holder wins the lawsuit
- The judge orders you to attend court for a hearing and
- You fail to attend that hearing
When you ignore the judge’s order, the judge can hold you in contempt of court. When you’re in contempt of court, the judge can issue a warrant for your arrest.
This scenario happens rarely. The Department of Education hardly ever sues for defaulted student loans. And private student loan lenders usually don’t request asset hearings.