This hold will not be released until the past-due portion of your loan is cleared. When you apply for credit of any kind, the potential creditor usually checks your credit record through a credit reporting service. A delinquent student loan on that record will be an obstacle to your obtaining a home loan, car loan, credit card, or any other form of credit. Even when you clear the delinquency, the fact that the loan was once delinquent will remain on your credit report. The regulations that govern the student loan program require that California State Universities refer to an outside collection agency any past-due borrower who has not responded to our internal collection efforts.
Collection agencies are in the business of pursuing collections vigorously and aggressively.
If the circumstances warrant, they will proceed with litigation. If a judgement is obtained against you, you will be responsible for all court costs in addition to the entire unpaid principal balance plus interest. A court judgement on your credit record may come back to haunt you in both your career and private life. Your wages may be garnished and your credit report will be affected. In addition, you must pay all the costs of the collection agency.