This often means your educational pursuits will be put on hold, and you must get out of default to receive aid again.
11. Suspend Your professional license
While this won’t apply to everyone, some states may even revoke your professional license if you default on your student loans..
12. Suspend your driver’s license
While state laws change annually, some states have been known to suspend your driver’s license in the past if you default.
Needless to say, this makes it more difficult to get to and from work, which creates further issues earning a paycheck to repay student loans.
13. Loans go to collections
Another potential consequence of defaulting on a private student loan that the lender may send your debt to a collection agency.
The agency will charge additional fees when trying to recoup the money. They usually add up to 25% more than what you owed initially on your principal, which only compounds the problem and puts you deeper in debt.
14. You could be arrested
You won’t go to jail for not repaying your student loans. But you may end up facing a lawsuit for unpaid debt.
While the concept of “debtors’ prisons” is illegal and no longer exists, some people do end up under arrest if they fail to follow a court order.
What to Do If You Can’t Make Your Student Loan Payments?
There may come a time in your life where you struggle to make your student loan payment due to insufficient income, job loss, or another financial emergency. It’s important to understand what happens if you can’t pay your student loans because of something like this.
What to do if you can’t pay your federal student loans?
If you can’t make your federal student loan payments during the COVID-19 outbreak, you’re in luck. The federal government has suspended payments and interest on all federal student loans through . You are not required to make payments during this time.
If you still can’t make your payments once the suspension of loan payments has ended, you still have a number of options.
One of the benefits of having federal student loans is that they have plenty of options available to make it easier to pay your loan or pause payments altogether in some situations.
The federal government allows borrowers to change their repayment plan at any time for free, so you can switch to one that better fits your situation.
The standard repayment plan requires borrowers to pay off their loans in 10 years. But someone with more than $30,000 of debt is eligible for an extended repayment, which gives you an extra 15 years to pay off your loans.
At the end of the deferment period, interest will be capitalized (meaning added to the principal balance to also accrue interest).
For both programs, you may need to provide your loan servicer with proof of your financial hardship. Make sure to take this step as soon as you know you can’t make your payments because you can’t enter deferment or forbearance once you go into default on your loans.
What happens if you can’t pay your private student loans?
These loans don’t often come with flexible repayment payday loans no credit check in Michigan plans. Most often, your lender simply puts you on a repayment plan that will have the loan fully paid off on their desired timeline.
If you can’t pay, your first step should be to call your lender and ask if they have any special repayment programs. For example, SoFi offers an Unemployment Protection Program, which allows for a 12-month forbearance if you lose your job through no fault of your own. Sallie Mae offers forbearance for borrowers facing temporary financial hardship, also for up to 12 months.