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You’ve worked hard to earn your college degree, and you’re embarking on the next phase of life. Along with the excitement of starting a career comes the responsibility of paying off your student loans.

Defaulting on your student loans can cause serious problems down the road. Take a look at these warnings below to decide whether the act is worth the risk.

What does it mean to default on student loans?

Failure to pay back your loan according to the terms you agreed to will put you in default. Default typically occurs after nine consecutive months (270 days) of not making a payment on a federal loan.

Why shouldn’t you default on student loans?

  1. Money will be garnished from your paycheck, tax refunds, or benefits.

If you are a W-2 earner, the government may take money from your paycheck when you default on a government loan. This is referred to as garnishing your wages. Money may also be taken from social security and disability benefits as well as your tax return by court order to put towards your student loan payments.

  1. You might be sued.

If you’re self-employed (not a W-2 earner), the government can also sue you for the money you owe. In addition, if your loan is through a private lender, their main course of action when you default is to sue because private lenders are unable to garnish wages.

  1. You may be chased by collection agencies.

Government and private lenders use collection agencies to get their money back. These agencies charge heavy penalties and fees for not making payments, so you’ll often pay much more than if you paid back your loan to the original lender.

  1. Your credit will be at stake.

Defaulting on student loans negatively affects your credit. This means it will be difficult to open a bank account, rent an apartment, or obtain a loan for a car or house. You’ll also be subject to higher interest rates on loans.

How You Can Avoid Defaulting on Student Loans

Part of entering the world of adulthood is dealing with your finances. The consequences of defaulting on loans sound scary, but don’t despair! These easy steps can help you avoid defaulting.

Visit your campus financial aid office.

They’ll answer your questions, explain the different types of loans, and direct you to the right resources.

Only borrow the minimum.

You may be approved for far more money than what you actually need. Determine a budget for each semester before accepting that offer, but avoid including luxuries like dining out or money for shopping.

Understand the type of loans you have.

You may receive money from grants and scholarships, which don’t have to be repaid. Know the difference between your financial aid resources and be sure to review the interest rates and repayment terms on your loans.

Monitor the progress of your loan payments.

Keep track of your loans online and maintain paper records of payments.

Be proactive!

If you are going to be late on a payment or you can’t keep up with monthly payments, contact your lender. Never ignore letters or phone calls from your lender. You may be able to consolidate loans, get a better interest rate, or create new monthly payments that are more manageable for your budget.

With proper money management, knowing what you owe, and tracking your student loans, you can avoid the chance that you will default on student loans while you embark on a new career.