Financing your education is an important investment. How effectively you manage your student loan debt is reflected in all aspects of your life. Understanding your obligations and the consequences of failing to repay your student loans is crucial in maintaining your financial health.
Understand Your Obligations
As a borrower, you have the following responsibilities:
- Notify your lender of changes to your name, address and telephone number.
- Tell your lender if you change financial institutions if your payments are automatically deducted from an account with that particular institution.
- Contact your lender immediately when you encounter financial difficulties that inhibit your ability to pay.
- Make on-time payments even when you are waiting for notification regarding your request for a deferment, forbearance or loan consolidation.
- Repay your loan(s) in full according to the terms stated in the promissory note(s) you signed.
- Avoid delinquency and default by working with your lender to establish a payment schedule you can afford.
Consequences of Not Paying
Not paying your student loans can jeopardize your credit history and ability to borrow in the future. Here’s what you need to know:
If your monthly payment is late, you are considered delinquent on your loan. When this happens, your lender may contact you, begin collection activity, assess late fees and possibly report your delinquency to a credit bureau.
Failure to Pay
Defaulting on a student loan damages your credit history and can negatively affect your personal and professional life. Plus your cosigner, if any, can be held responsible for your loan obligations.
Default has substantial, long-term, and adverse consequences for both you and your cosigner, if applicable:
- Your loan may go to a collection agency and legal action could ensue.
- Your default is reported to the major credit bureaus and stays on your credit record for at least seven years, whether or not you pay it off later.
- Your wages could be garnished.
- Your obligation to pay your education loans may not be dischargeable in bankruptcy.
Get Relief in Times of Financial Difficulty
If you are having difficulties or are unable to pay your student loans, don’t delay in getting help. Contact your lender immediately when you encounter financial difficulties that inhibit your ability to pay.