Many people who attend college or university in Kentucky take out student loans to help pay for their education. These loans are often regarded as safer than other types of loans, as they have relatively low interest rates and generous terms of repayment. However, it is still possible to get into a financial situation where you end up defaulting on your student loans.
If you fail to make a payment for 270 days, your student loans go into default. What happens if you default on your student loans?
Your credit score dips
A good credit score makes it easier to get a mortgage and take out a credit card, among other things. Defaulting on your student loans, just like with any other loans, does hurt your credit score. The extent to which the score lowers depends on factors such as how overdue you are on your payments.
You may face garnished wages
Your student loan company can ask your place of employment to take out a portion of your wages to help pay off your overdue loan payments.
You lose repayment options
If your loans are in default, you can lose your ability to choose a student loan repayment plan, such as pay as you earn or income-based payment. This is a tough situation to be in for someone who is already struggling financially. If you have trouble paying off your student loan debt, ask about your options before this happens.
Being aware of what can happen if you default on student loans can help you make better decisions in the event that this occurs.