If you default on your loan and make it necessary for us to contact the co-signer, you are violating this trust and forcing someone else to be responsible for your obligation. When you apply for credit of any kind, the potential creditor usually checks your credit record with a credit reporting service. A delinquent student loan on that record will be a definite 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 record. The regulations which govern the student loan program require the University of California to 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 judgment is obtained against you, you will be responsible for all court costs, in addition to the entire unpaid principal balance plus interest. A court judgment on your credit record may come back to haunt you in both your career and private life. Your wages may be garnished by your employer and your credit report could be affected. In addition, you must pay all cost of the collection agency.