Current Events > As someone who has no student loan debt, what happens if you just stop paying?

(+) Yeah! (+)

Let's assume you're already in an apartment with some sort of job along with a decent car. May not be a great apartment but it's there. May not be the newest car but it's a ~2016 Honda and should still be fine for at least another 10 years because Honda is goated.

What happens if you just stop paying your student loans? You're already in your apartment so they aren't gonna kick you out, they don't care about your credit/income once you're already in the door. You're nowhere close to buying a house anyways so the credit hit won't practically matter. You're already on your car payment plan so that'll be paid off soon enough and you won't be applying for any other loans on that front. And even if 10 years down the road your Honda shits out (it won't, Honda is goated), you could save up the $500/mo you aren't paying towards loans anymore and just buy another one outright in straight cash.

What happens if you just stop paying?

Garnishments I would imagine...payments taking directly from your paycheck.

https://www.consumerfinance.gov/ask-cfpb/what-happens-if-i-default-on-a-federal-student-loan-en-663/

It would go into default. And you definitely don't want to default on a federal loan. It's government, so they can just take money from you. Garnish your wages, take your tax returns, take your covid relief checks...

And you'll still be accruing interest during all of that, so... it won't stop for a long long time.

What about non-federal ones?

I could just defer my loans payments indefinitely, tbh, and I did for a really long time before deciding to just pay it off.

Depends.

Government loans will go into default and they can garnish your paychecks. You can get away with this if you dont make enough, or are a private contractor. Not worth the hassle. Can get garnished and ruin your credit, if you care about that.

Private loans have protections. If you can somehow avoid them for however long your states Statute of Limitations on loans is, you can make it uncollectable. They can still call and harass you, but you are technically off the hook. Very risky and most people cant do it, because you can also get garnished and tank your credit.

I havent paid in 15 years

they garnished my wages at one job, but never did it again after I quit that job and moved to others

they can def sue me though, it has happened to people for sure, but thats usually the people with 100k+ debt. Mine was only like 23k and now around 45k.

_____Cait posted...

Depends.

Government loans will go into default and they can garnish your paychecks. You can get away with this if you dont make enough, or are a private contractor. Not worth the hassle. Can get garnished and ruin your credit, if you care about that.

Private loans have protections. If you can somehow avoid them for however long your states Statute of Limitations on loans is, you can make it uncollectable. They can still call and harass you, but you are technically off the hook. Very risky and most people cant do it, because you can also get garnished and tank your credit.

It actually falls off your credit report after 7 years and your credit rapidly rebuilds then. You still owe the money, but it doesnt hurt your credit any longer. Its known as strategic defaulting in the student loan debt world. You go through 7 years of shit credit and then you can rebuild. Kinda like bankruptcy except you still owe the money and the amount you owe continues to increase

New semester just started for a bunch of college kids, Biden is almost guaranteed to announce 10k forgiveness today, wonder if it goes into effect right away and new students in college just got free money if they FASFAed and took their loan.

Its tricky though because if you make even ONE payment in those 7 years, the clock resets, so you have to be committed to 7 years of struggling to find an apartment

bknight posted...

New semester just started for a bunch of college kids, Biden is almost guaranteed to announce 10k forgiveness today, wonder if it goes into effect right away and new students in college just got free money if they FASFAed and took their loan.

honestly Id be way happier if he just cancelled interest, thats the part that is fucking everyone

Federal/governmental institutions charging interest too? Shouldn't that be illegal that doesn't sound fair

None of this would be an issue if people went to colleges they can afford. Unless maybe you're going for a super high paying executive career, no one cares where you went to school as long as you have a degree. Get it online if you can't afford ivy league. Don't go in debt to be an accountant or engineer lol

Noumas posted...

Federal/governmental institutions charging interest too? Shouldn't that be illegal that doesn't sound fair

ohhhhhh yeah, and the rates are insanely predatory

our government is doing everything possible to dissuade people from becoming highly educated

LeoRavus posted...

None of this would be an issue if people went to colleges they can afford. Unless maybe you're going for a super high paying executive career, no one cares where you went to school as long as you have a degree. Get it online if you can't afford ivy league. Don't go in debt to be an accountant or engineer lol

There is no affordable college degree

The colleges that are affordable are straight up scams and every employer knows it and wont hire those kids because they arent properly educated

My alma mater's lawyer had my bank account frozen when we disagreed on how much I should pay each month.

I paid him what he wanted, but he thought I wouldn't, so he froze my bank account. And then it took about a month for the bank to unfreeze it.

A few days later, I took all my money out of that bank and opened an account with another bank.

VigorouslySwish posted...

There is no affordable college degree

The colleges that are affordable are straight up scams and every employer knows it and wont hire those kids because they arent properly educated

My boss got her masters online and said it was way cheaper and more convenient than other options she looked into. She was able to work at the same time to pay for it. She's now making bank and moved up from accounts payable to being supervisor of two departments.

It at least works with some employers. Of course she didn't get the college experience of dorms and frat parties and such but she also doesn't owe anyone $50k or whatever.

LeoRavus posted...

None of this would be an issue if people went to colleges they can afford. Unless maybe you're going for a super high paying executive career, no one cares where you went to school as long as you have a degree. Get it online if you can't afford ivy league. Don't go in debt to be an accountant or engineer lol

A lot of the schools lied.

Thats why a lot of students got into debt they couldnt afford. And a big reason why those schools got shut down. But the students still owe the debt.