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Simply put, student loan default happens when borrowers do not pay their student loans as agreed in the contract. In this article, read and find out more about student loan defaults and how to avoid them.
![Notice of Loan Default [Photo: Forbes]](https://s3.us-west-1.amazonaws.com/southarkansassun.com/2023/01/0x0-5.jpg)
Notice of Loan Default [Photo: Forbes]
According to an article from MARCA, the most critical impact a default on student loans can leave is a direct hit to a borrower’s credit. This means a borrower can lose access to other federal financial assistance and have their wage withheld from paychecks. In addition, tax refunds can also be withheld and companies can charge borrowers with excessive fees.
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How to Avoid Student Loan Default
As stated in Federal Student Aid, to avoid student loan default, a borrower must fully understand their loan agreement and the types of loans they are receiving. Unlike grants or scholarships, loans must be repaid. It is also important to borrow only what is needed for school expenses and not more than what can be paid. If there is trouble making monthly payments, immediately contact the loan servicer. A borrower may be able to change repayment plans for a lower monthly payment, change the deadline of the monthly payments, have an income-driven repayment plan, or get a postponement or leniency.
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