What happens if you default on private student loans? This is one question to consider before you apply for a private student loan. When you default on your loans, it may result in some serious consequences, and this post explains the consequences you get to face if that happens.
What Happens If You Default On Private Student Loans
For most student loan borrowers, the amount that they pay toward their debt at the end of each month is really not insignificant. You should know that the average monthly student loan payment is at the moment $393, which can be really overwhelming in the event that you are struggling to meet up with everyday expenses. And when you fall into the habit of missing out on your loan payments, then you will run the risk of your loans going into default, which as you should know have some serious repercussions.
Now that it has been established in regards to what you face when you default on your student loan payments, here is what you really get to face in case of eventually defaulting on your student loan debt.
While federal student loans do not go into default after 270 days of non-payment, borrowers with private student loans on the other hand are beholden to the rules of their own loan providers. It is very important to read the terms and agreement of your private loan service, as well as reach out to a customer representative in the event that you are unable to repay your debt.
The main consequences of defaulting on your private loans as you should know vary from lender to lender, but they may however include your late payment being reported to the credit bureaus or even your debt being sent to a third-party collections agency. Also, you risk being sued by your lender for repayment of the defaulted loan in question. And losing the lawsuit could however end up triggering garnishment of wage or a possible seizure of your home all depending on the laws of your state. It is best practice to check in with your lender in regards to any forbearance programs sooner than later in a bid to avoid these severe consequences in question.
What to Do If You Are At Risk of Defaulting On Your Loans
You should act fast by talking to your loan servicer immediately in regard to how you can get back on track.
While federal student loan borrowers may differ, Private student loan borrowers, on the other hand, may want to consider refinancing since private loans do not come with the very same protections and benefits as federal student loans.
Refinancing your private student loan(s) can easily let you to streamline multiple payments into one single monthly bill. You also might be able to get a lower interest rate in the event that you qualify, which can make your monthly payments much more affordable.
Private student loan borrowers should, however, consider SoFi Student Loan Refinancing, which has been ranked by Select as the best overall student loan refinance lender for its low-interest rates as well as borrower payment protections. SoFi as you know also stands out for having its very own Career Advisory Group to help members easily and effectively look for new employment, and it also offers access to live customer support 7 days a week. Plus, members of SoFi get free career coaching and financial advice from planners.
MORE RELATED POSTS