If you are experiencing difficulties with loan payments, contact your servicer as soon as possible. The earlier you take action, the more options you will have and the less likely it is that your temporary financial difficulties will have a negative effect on your credit history. Default is the technical term for failure to pay back your student loan. When you've been delinquent for a certain number of days, you will be declared in default. And while you're at it, find out more about the very real benefits of paying on time.
Loan default has long-lasting or permanent consequences.
Your default will be reported to all national credit bureaus and will impact financing of any future purchase, such as a home or an automobile. You lose the ability to use many attractive repayment options, such as income sensitive or graduated repayment, that are available to borrowers in good standing. You lose the ability to discharge your education loan through bankruptcy if you default on your student loan prior to filing your petition for bankruptcy. Your wages can be garnished to pay back your loan. Your income tax refunds or other government payments can be used to pay back your loan.