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Break Up with Student Loan Default

Missing Student Loan Payments

If you haven’t made a payment on your student loan in months, you’re not alone. One in four student loan borrowers are in student loan default, according to the Department of Education. Loan holders default on student loans for a variety of reasons, from being unable to make unaffordable monthly payments to simultaneously struggling with credit card bills. While default may be a common issue, you don’t have to put up with it.

Defaulted Status

When you default on a loan, it means the lender can now take legal action against you. While your loan will be considered delinquent from the first day after your missed payment due date, your default timeline depends on the loan servicer and its terms. For instance, a federal education loan can default after 270 days without payment, whereas a private student loan can default as soon as you miss your first payment.

How to Find Out if You’re in Default

If you’re not sure whether your student loans have defaulted, you have a few options to find out.

The quickest and only real-time way would be to contact your student loan servicer. They will be able to tell you quickly if you’re in default. However, you may not be ready to talk with your servicer, and that’s okay.

You can also enter your Federal Student Aid account online to find out if any of your federal student loans are in default. Just log in with your FSA ID, click on your loan, and check its repayment status to see if it’s in default. However, this won’t give you insight into your private student loans.

For private education loans, you may be able to see your loan defaults on the negative information section of your credit report, which you can pull once a year for free.

If you’re still not sure whether you’re in default, you can always contact us. Our Student Loan Advisors will be able to investigate your current student loan situation. If any are in default, we won’t just let you know – we’ll also help you find the best way to break up with that default status.

The Red Flags of Student Loan Default

When you fall into default, the entire unpaid balance of your student loan and any accrued interest becomes due immediately. You’ll also lose access to many benefits of federal student loans like deferment, forbearance, and changing your repayment plan. Your school can also withhold your academic transcript until you’re out of default.

Unlike other debts, your student loan debt will not disappear regardless of how long you wait. Your debt will only go away on its own if it’s forgiven, discharged, or if you pass away. When none of those situations apply, the best way to get out of student loan default status is to pay the entire amount owed immediately. But when “immediately” isn’t possible, your total balance will accumulate interest – and lots of it.

And aside from the interest, you can start facing the wrath of collection activities from your lender, which can impact your financial well-being.

Aggressive Actions from Student Loan Lenders

  • Reporting your default to credit agencies, hurting your credit score
  • Garnishing your income
  • Filing lawsuits and/or judgements against you
  • Imposing collection fees, as high as 40 percent of your total debt

If a collection agency is on your tail about your student loan debt, keep your cool and take action. Collections activities like wage garnishment and collection fees can damage your finances in the long run. Can’t repay your loans right away? That’s okay. You’ve got other options to consider.

What to Do When You Owe

You have options, even with a defaulted loan. Arrange to settle your owed debt ASAP, even if you’re not paying the entire amount at once. While the right plan can help you resolve the default, it’s difficult to determine that on your own. There are so many student loan solutions you might be eligible for.

Student Loan Solutions that Could Get You on the Right Track

Speak with a financial professional such as our Student Loan Advisors to learn what your options are for your unique situation. Remember, your payments won’t get easier or go away unless you know how to address them.

Don’t let your credit, paycheck, and ability to provide for your family take a hit because of owed student loans. Our team will empower you make the best decision to get back to your life.
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