What Happens If I Stop Paying My Federal Student Loans?

financial stress

Student debt is a cumbersome weight to put on a person’s shoulders, especially a younger person fresh out of school. Recent graduates often go a year or more before they are able to find decent employment that pays well enough to somewhat ‘handle’ their student loans. Even then, the question has likely crossed your mind: “What would happen if I stopped paying my federal student loans?”

Defaulted Federal Student Loans

If there is one scenario in which you do not want to start withholding money, it’s when you owe the government. It will certainly not go the same as when you ‘forgot’ to pay your friend back for that time he bought the pizza.

There is no other entity with the same kind of collecting power as the federal government, and they are not at all afraid to use it. Collection agencies working on behalf of the Department of Education can and will literally pursue you to the grave.

Tools Used by Collection Agencies for Student Loans

The U.S. government is able to use a variety of cut-throat tactics, many of which are exclusive to them, in order to take money back from you.

Also, unlike other debts, the government is never required to file a lawsuit against you before using any of the following collection tactics; however, they will sue you if they think it will get them their money, or just for funsies.

Examples of Collection Tactics

  • Wage Garnishment
  • Seizing Tax Refunds
  • Intercepting Social Security/Welfare Payouts
  • Harassment Via Phone, Mail, Email, and Carrier Pidgeon

Throwing you into a debtor’s prison is about the only thing the government can’t do. However, you will feel like you are in a prison once they have set their sights on you.

Unlike most others, student loan collectors don’t really care about or take into account the cost of living. If you are in a situation where every dime you earn is spit back out immediately to pay for food, rent, bills, medical care, or other essentials, the government will still garnish your paychecks, harass you daily, and seize any government aid and tax refunds.

In short, stop paying every other non-essential expense before you stop paying a federal student loan. If you are looking for relief or a way out, talk with a qualified bankruptcy attorney about potential solutions.

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