Not Paying Government School Loans Back

[JanetRose]

What would happen if someone doesn't pay back on their government student loans?

 

[kdibattista]

I think wages can be garnished through an employer or tax refunds can be confiscated but I'm not positive.

 

[The Mystery Machine]

Here is the official site...That should get you started.

http://www.ed.gov/offices/OSFAP/DCS/default.html

 

[ImarriedGrumpy]

They can do a number of things: garnish your wages, take any income tax return you might otherwise receive, and at the worst, you could be put in jail.

I have just gotten my student loans under $40,000, but I had a lot of years where I couldn't make the payments and I had to do forbearances, deferments, etc. to try and keep from defaulting on my loans. I met with a credit counselor who told me that the student loan debt is more important to try and pay back than credit card debt because the credit card companies can't do much of anything to me if I didn't repay them, but there are some strong penalties for not repaying a government loan.

 

[JanetRose]

The person I'm thinking about does not work but receives disability.

 

[barkley]

well, since only court ordered child support trumps gsl's on who gets first attachment dibs on tax returns-i would assume the person would never get taxes back (and the government can mandate an employer impose specific filing status-so you could'nt unrealisticly jack up your deductions), they could put a lein against salary. they would get a huge nasty on their credit reports that could keep them from ever being able to buy anything, anything they own outright could have a lein placed on it...even before the bankruptcy laws were revised to more restrictive you could'nt get out from under them.

 

[ImarriedGrumpy]

The person I'm thinking about does not work but receives disability.

Then they should definitely contact the loan company - there's all kinds of provisions and exceptions for people on disability. Depending on the circumstances, they may not have to repay the loans.

 

[DawnCt1]

Tax refunds are withheld. Wages are garnished. Collection costs are added. Federal employees face up to 15% of disposable income being withheld. Not a good idea to steal money from Uncle Sam. He is very unforgiving.

 

[icebrat001]

I think they'll take your tax return money and/or garnish your wages.

 

[barkley]

The person I'm thinking about does not work but receives disability.

depends on the disability source-"public assistance" based disability (afdc, ssi) they can't lower or take. disability from other sources (social security you've paid into, retirement, insurance policies, workman's comp) they mostly can and do (unless you get deferment).

 

[wdw4us2]

Sooner or later Uncle Sam will find you. My older sister was a deadbeat about repaying her college loans from the late 1960's - early '70's. I kept telling her she should pay them back while she and her husband were making good money but, being a flower child war protester, this was her way of getting back at the U.S. government.

Well, they finally caught up with her in the late 1980's when her financial situation wasn't the greatest. Their IRS refund was taken every year as well as her wages being garnished. Every time she'd whine about it I told her I had absolutely no sympathy for her. If you're gonna be dumb, ya gotta be tough.

 

[MagicKingdom05]

If I was that person, I would try and pay what I could and see if they would do anything, because not paying at all probably isn't an option.

 

[barkley]

someone on the radio was just say the other day that if pres. bush realy wanted all of the outlaw terrorists found he should deploy student loan collections staff-THEY CAN FIND ANYONE

 

[ericamanda01]

I just saw a news story about a man who was upset about some money being taken from his social security. Turns out it was a student loan from, and I may be wrong but I believe it was from 40 years ago. It went to the supreme court and now he has no choice in the matter.

 

[scarlett873]

Then they should definitely contact the loan company - there's all kinds of provisions and exceptions for people on disability. Depending on the circumstances, they may not have to repay the loans.

DH...who works in the student loan industry says that this is correct. However, if the loan is not discharged due to total and permanent disability, then consequences beyond tax offset and collections will apply. Some of these consequences may also include the inability to get certain jobs (i.e. any kind of bank or company with federal contracts), and bad credit for 10 years (it's looked at as one of the worst credit marks on a credit report).

It's worth mentioning that some debts will fall off of your credit report after 7-10 years. Student loan debts are enforceable as long as you are alive or have any kind of estate (social security payments or life insurance).

 

[mainewmn]

It is a law that states that bad credit can only be placed on your credit report for up 7 years.

 

[dbarker]

I don't owe, but if I did and didn't pay, I would lose my CPA license. Not could, but would.

 

[4formickey]

the goverment will get their money! I know this personally, Forget about getting any credit, You will not get a good rate. If a new job is in the works, they may pull your credit report and that will count against you. They will take you to court and force you to pay back everything. The student loan people can be just as bad as the IRS.

 

[barkley]

It is a law that states that bad credit can only be placed on your credit report for up 7 years.

i believe gsl's are exempt from this, as is money aquired through welfare fraud. we would report welfare fraud proceeds and it stayed on credit records for decades.

 

[golfgal]

If the loans are not repaid they will stay on your credit report for 7 years AFTER they are paid off. If you don't pay them off, they don't come off your credit report.

DH is in the finance business and has a hard and fast rule about lending money to people that don't pay off their student loans. The rest of their credit could be perfect but if they defaulted on even a small loan, he wouldn't approve their application. DH and I both got through college on student loans and paid back every single penny. It is his way of "thanking" the government for those loans.