Just about everyone who leaves college with or without a degree will have some sort of debt accumulation from tuition and housing costs. Unfortunately, those who are not able to make the student loan payments due to living expenses and other costs will face student loan default. What is student loan default? Student loan default is when an individual misses consecutive monthly student loan payments on money that was borrowed for college related expenses such as housing, tuition, and text books. A student loan default can have a serious negative impact on a person’s life and future. Here is an explanation of what can happen by not making student loan payments that result in student loan default.
A student loan default can make finding an apartment very difficult. The internet has made it very easy for landlords to pull an individual’s credit report by costing a small fee. The small fee is usually paid by the individual who is seeking an apartment in the form of an application fee; thus, it is not costing the landlord anything. Landlords use a credit report as a helpful indicator whether the prospective tenant will be an on time paying tenant. A student loan default on a credit report indicates to the landlord that the individual is not a reliable person who pays regularly. Thus, the landlord is more inclined to accept another prospective tenant who has a better credit report than someone who has a student loan default listed.
A person’s credit card(s) limit(s) will begin to decrease from a student loan default being listed on a credit report. The student loan default that is listed on a credit report will be monitored by credit card companies. The credit card companies will then see the individual as a risk and set in motion the lowering of borrowing privileges. The student loan default listed on a credit report will also make it almost impossible for someone who wants to finance a car or home. If the individual is lucky enough to get a loan for a car or home then he or she will more than likely have an extremely high interest rate.
When an individual has made no effort to resolve the student loan default and make any student loan payments on the amount that is owed is when a loan company will begin to take legal action. This type of debt is usually not allowed to be discharged in a bankruptcy court; therefore, it is a guarantee that it will eventually be paid back whether the person will be able to afford the student loan payments or not. Wage garnishment and the seizing of income tax refund checks are usually the outcome of a student loan default. A wage garnishment is a judicial order that directs an employer to take out a certain percentage of the employee’s paycheck. The percentage is then forwarded to the loan company to pay towards the outstanding debt from the student loan default.