What happens if you don't pay your student loans?

The clock is ticking for millions of Americans with student loans as repayment plans will soon begin for federal loan borrowers. But what happens if you can't afford to pay? That's the reality facing many people. And while several are anxious over the consequences of not paying their student loans, others have already made the decision that they simply aren't going to pay those bills once they restart.

Student loan interest will start accruing on September 1 and payments will restart in October. That means tough decisions for many borrowers, especially those in already-difficult financial situations. It might seem tempting to just continue not making payments, but the consequences can be severe, including a hit to your credit score and exclusion from future aid and benefits.


What happens if I don't make student loan payments?
Once payments restart in earnest, borrowers who can’t or don't pay risk delinquency and eventually default. That can badly hurt your credit rating and make you ineligible for additional aid and government benefits.

If you’re struggling to pay, advisers first encourage you to check if you qualify for an income-driven repayment plan, which determines your payments by looking at your expenses. You can see whether you qualify by visiting the Federal Student Aid website. If you've worked for a government agency or a non-profit organization, you could also be eligible for the Public Service Loan Forgiveness Program, which forgives student debt after 10 years.

Carolina Rodriguez, Director of the Education Debt Consumer Assistance Program at the Community Service Society of New York, emphasizes that anyone temporarily unemployed should be able to qualify for a $0 payment plan. And many others qualify based on income and family size.

“The repercussions of falling into delinquency can be pretty severe,” Rodriguez said. “The federal government can administratively intercept tax refunds and garnish wages. And it can affect Social Security, retirement, and disability benefits. Does it make financial sense at that point? Probably not.” #Money #Politics #StudentLoans

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