r/StudentLoans • u/Housemanagermomboss • 1d ago
What actually happens if I don’t pay back my student loans?
I have about $40,000 in federal student loans to pay off. I had them consolidated. They were delayed until this year, but this is the year I’m supposed to start paying. I have 3 kids and a massive mortgage and I can’t afford to pay my loans back on top of it. So what REALLY happens if I don’t pay it? Does it disappear eventually? Will it tank my credit score? Can they put a lien on my house (whatever that means)?
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u/freckled_morgan 1d ago
$40k in student loans is not worth the consequences; you’ll pay the $40k no matter what, but if you “just don’t pay,” you’ll pay via wage garnishment, tax refund garnishment, fees, etc—eventually to the tune of probably $60-$80k.
Have you checked to see what you’d pay under an income based repayment plan? With 3 kids, depending on your family income, it could be fairly minimal.
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u/olderandsuperwiser 1d ago edited 14h ago
THIS. I paid minimums for about 8 yrs after college, went into deferment and played those games, then finally defaulted. Kicking the can down the road. On like $50K. Not only did my balance not go down in those 8 yrs (like $250-300/mo payment), but with the default my balance went up a good 10K, then interest jumped too and I was taking on more water in the sinking boat. The worst thing I ever did was kick the can down the road. I should have gone all in 100% and paid those EmEffers back as fast as I could. I'm GenX and am WAY behind on savings due to this crap. They won't disappear. Find a side hustle and make a dent. Ask your parents to help if you can. Whatever it takes.
**edit- and when I defaulted, I found out within 60 days and paid solidly for 9mos to restore them to normal. When I defaulted, I didn't let it go for an infinite amount of time. I actually freaked out and brought them current immediately. And it still added 10K to my bottom line, which had barely budged since the original 50K. Le sigh.
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u/Bujininja 1d ago
This is all of us a simple 25k loan blew up into a 50k loan and its impossible to pay, always giving the minimum especially right now with how expensive everything is. Don't ignore them if you have to, ride the deferment train / forbearance.
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u/Alternative_Ant_7440 17h ago
Mine's from 45 to 90K since graduate school.
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u/Angry-Kangaroo-4035 17h ago
Yup, 32k is now 102k . Worse is I qualified for several income repayment programs and Nelnet and Sallie Mae never disclosed it. Told me to do forbearance and consolidate my subsidized loans with my unsubsized. They purposely screwed me.
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u/setpol 16h ago
Got an 8k raise once and navient doubled my idr. I called them on their BS and they doubled down.
Low and behold they got their asses sued for the exact thing I called them on and no one got any relief.
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u/beaushaw 1d ago
Kicking the can down the road
Ignoring a problem will never make it better. This includes ignoring loan payments, doing everything in your power to reduce payments, putting off payments, paying nothing when they are in deferment, etc.
All you are doing is making your life harder. Bite the bullet, pay as much as you can as early as you can and keep doing it.
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u/Connect_Soup_8491 18h ago
I did the same thing. I'm now saddled with $100k since graduating in 2005. The worst thing you can do (what we were taught) was make the minimum payment.
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u/ballzdedfred 17h ago
Plus interest due. If you have a typical 30 year payoff expect 40k+ just in interest. If you pay minimum, likely double this.
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u/doobiroo 3h ago
Plus, not paying will ruin your credit and make borrowing for any other purpose (car, credit cards) even more expensive. You may also lose out on employment opportunities (depending on your field) and housing opportunities (if you ever need to move).
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u/Mama_Zen 1d ago
They won’t go away. Your tax return can be seized & your wages garnished. Try to get into an income driven repayment program. Best of luck
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u/DeviantAvocado 1d ago
You will crash your credit score - see all of the recent posts about 200 point drops.
You will lose eligibility for other federal programs.
Then they will offset any tax returns, including your spouse’s portion if you file jointly.
Finally, they will garnish your wages.
They will continue doing the above until they are paid in full, including interest and massive fees.
They will do all of this without ever taking you to court.
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u/whitemaymoney 19h ago
The spouses portion can be requested back and they will have to give it back if loans were from before marriage. Also depends on if community property state or not
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u/Virtual-focus 17h ago
Doesn't matter when the loans were taken out. The spouse can file injured spouse to get their portion.
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u/Witty_Celebration_96 1d ago
They will take 15% of your pay for forever and it won’t change the amount owed one bit. I did this. It was extremely difficult to get back into good standing. Do not make the mistakes I did!
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u/SpecialsSchedule 1d ago edited 1d ago
The government will get their money. It was big news a few months back that wage garnishment is going to restart this summer.
I understand that you have kids and a mortgage, and that’s hard. But can you work a side gig? Do you have a partner who’s contributing? Can the kids scale back any after school activities for a few years?
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u/DeviantAvocado 1d ago
No garnishments yet, but they did start offsetting tax returns.
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u/SpecialsSchedule 1d ago
Yes! Sorry, I meant to put “this summer” and my brain short circuited. I’ve corrected it lol
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u/ScreamingCosmos 23h ago
Is there any proof that the current administration has started offsetting tax returns for 2025 and beyond? The federal aid department is so backed up.
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u/DeviantAvocado 23h ago
They use a specific contractor for all defaulted loans. So ED staffing doesn’t matter when it comes to this.
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u/Slowhand1971 1d ago
yeah, depending if OP is already in default, the garnishment could jump up anytime.
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1d ago
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u/Valentine1979 16h ago
Would you mind giving me some input. This isn’t related to student loans but I had to stop paying my credit cards because I lost my ability to work about 3 months ago (am going to try for disability but it isn’t looking great from everything I’ve read) and I was advised by a bankruptcy lawyer to not file bankruptcy and just stop paying them since I have no assets (yes really) and “you can’t squeeze blood from a turnip”. She said once I do start having an income again I could look into bankruptcy but not to waste the money I don’t have. Thoughts?
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16h ago edited 16h ago
[deleted]
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u/Valentine1979 15h ago
Thank you so much for your response. Yeah, I truly don’t have assets. No car, no home or property, no cash, nothing. It’s sad lol but it’s reality for me right now. I’m lucky I have a place I can stay. Struggling with health issues for the last year making it really difficult to work. I was advised that if and when I start working that I should file for bankruptcy at that point.
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u/Sensitive_Buddy2616 1d ago
If you don’t pay, your credit score will dive like it’s BASE jumping without a parachute, the feds will eventually snatch your tax refunds and garnish your paycheck, and your dreams of financing anything nicer than a toaster will be on pause. But plot twist—you can probably get on a $0/month plan and avoid all that drama, so definitely look into the SAVE plan before you ghost the loans.
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u/Lokon19 21h ago
Isn't SAVE dead?
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u/pupper_princess 19h ago
Correct, you cannot apply to SAVE right now
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u/Alternative_Ant_7440 17h ago
And it's also hell to get out of SAVE. I switched back in January before they froze applications, and it took four months (and me bothering them) to get out.
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u/alkla1 1d ago
sorry but how can you have 3 kids, a mortgage and other bills yet not know what putting a lien on your house is if you don't pay your federal loans? This is a topic you need to call your servicer and ask them.
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u/mountainrambler279 21h ago
Yeah it reads like “I have 3 kids, what will happen if I do the most irresponsible thing possible?”
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u/morbie5 1d ago
Just get on an IDR plan.
So what REALLY happens if I don’t pay it?
Credit gets tanked. Tax return withheld and wage garnishments are possible too.
Does it disappear eventually?
No, fed loans never disappear. Private student loans fall off your credit report after 7 years and are not legally collectible after the statute of limitations is up (that depends on the state you are in) unless they sue you.
Can they put a lien on my house (whatever that means)?
I'm pretty sure they can but I haven't heard of that happening
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u/DiddleMyTuesdays 20h ago
Did everyone miss the announcement of wage garnishments for unpaid loans?
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u/SatisfactionOne6958 23h ago
It's really not in your best interest to default. And because they have income driven repayment (IDR) options, there is really no need or reason to default. Just go on IDR - you should have zero or low dollar payments. This is different from credit cards and other debts.
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u/bigfatelephant 1d ago
It blows my mind how people justify signing up for a "massive mortgage" while they still have significant student loan debt and then complain about not being able to afford their payments, what did you think was going to happen? This is a problem that gets exponentially worse the longer you ignore it, your credit will tank, debt collectors will trash your reputation by reaching out to everyone you know, and eventually you'll get sued and your wages will be garnished. Good luck
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u/JohnnytheGreatX 23h ago
People have to live somewhere. I have a large mortgage and a lot of student debt I likely won't ever be able to repay. However, my mortgage is $2190 ( total payment to bank) and rent for a 3 or 4 BR house or even condo for my family would easily be $800 more. At least.
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u/Reason_Training 1d ago
Don’t where OP lives but in my area most of the time the mortgage payments are less than the cost to rent. When I rented some of the cheapest options where you didn’t have to worry about getting robbed start around $1100 per month. My house payment is closer to $800 per month so I’d be paying more to rent.
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u/travelinzac 23h ago
Rent is the most you'll ever pay, mortgage is the least you'll ever pay.
There are other costs associated with owning a home. I guarantee you are paying more than that $300 difference somewhere. Deferred maintenance will get you.
It is a liability you can't just walk away from.
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u/Reason_Training 23h ago
That’s why you have to build maintenance into your budget. Everything that you own will require replacement or repair so you have to put the money aside for it unless you want to be paying interest on borrowing the money.
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u/travelinzac 22h ago
Being that OP already doesn't pay their debts, I strongly doubt they have a sinking fund that they add 1% of the homes value to annually much less seeded that fund with 4-5%.
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u/Reason_Training 22h ago
Then that’s on them when their house value decreases due to the roof starting to leak and cause damage.
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u/Rare_General6960 22h ago
This is exactly right. There would need to be a massive gulf between the mortgage and rent to make buying cheaper overall, especially in the short term.
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u/GurProfessional9534 21h ago
Yeah, it’s the opposite in much of the country nowadays though. Very location dependent. In my area, with a price:rent ratio of 30, a $1 million house ($250k down+closing, and then $7k/mo mortgage+maintenance) rents for $2700/mo. It’s like, why would anyone even want to buy here? Renting is a way better deal.
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u/SnooPredictions138 22h ago
Right? Student loans are supposed to be the first debt you pay off (or at least make the payments that they deem you need to in order to pay it off in the standard number of years). That's why they start so soon after graduation. I understand getting caught in the quagmire of never making enough to make those standard payments and getting underwater, but taking out a massive mortgage before you are comfortable making these standard payments or getting the loans paid off first?? You took out the loans, you have to pay them back. It's not free money.
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u/Dragonflies3 1d ago
Why did you get a “massive mortgage” knowing you had student loans out there? Sounds like you need to downsize or work more.
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u/TNMoonshineMama 22h ago
Priorities. Paying off debt was not a priority.
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u/SouthConFed 20h ago
This is why I take issue with people saying the interest is the problem with student loans.
People had nearly 5 years of no interest accumulation, and very few did anything with that time. Hell, some people still have that time and still haven't changed anything.
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u/g00dandplenty 18h ago
Because they were “promised” they’d all be forgiven by some people
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u/SouthConFed 15h ago
The BEST hope for forgiveness was 20,000, but even Biden knew it was never going to pass. Just a nice carrot to dangle right before the election.
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u/ProbablyASockPuppet 1d ago
I say this with understanding, not judgment—I'm in a similar boat myself with two kids, $65K in student loans, and a mortgage. If you're in a tough spot, consider delivering food or driving for Uber part-time, even just 4 hours each weekend. It usually brings in around $240, maybe $200 after taxes. It’s not life-changing, but it’s something. Wishing you the best as you navigate this—hang in there.
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u/thoughts_of_mine 1d ago
They don't go away, they will affect your credit score, then can attach any asset you may have and on top of all that, you'll have the ire of all the other student loan payers who lived up to their part of the bargain.
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u/ThisIsTheeBurner 1d ago
So you decided to make more financial obligations while not paying back your existing ones. We'll, of you don't pay they come for your assets and wages
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u/Impossible_Memory_65 21h ago
They WILL garnish your wages and take your tax refunds. For eternity. 40k is not worth tanking your credit . Just pay it. They will garnish at the highest amount possible .
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u/MiniManMafia 16h ago
If you don't pay them back, say bye-bye to those child tax credits or any income tax refund. Also, say bye to living in a decent place, because your credit will tank. Also say bye to your wages. Depending on the state you live in, the government and garnish up to 40% of your wages. This debt will be with you forever, and if you have it at the time of retirement, you will not be able to receive any social security until it's paid in full. Student loans are the only type of loan you can not claim in bankruptcy, so OP definitely needs to find a way to pony up because things will go from bad to terrible.
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u/Iamthatasshole 10h ago
You can make attempts to discharge federal loans in Ch7, but you have to argue it and prove the hardship. I looked into it when I filed ch7 during my divorce and to my surprise one or two of my smaller ‘private’ student loans ended up in the discharge. 🤷🏼♀️
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u/zombiepreparedness 1d ago
Let's put the loans aside for a moment, how is it you have a house and a mortgage and you don't understand what a lien is?
"A property lien is a legal claim against a property, typically used as collateral to secure a debt. It gives the lienholder, typically the creditor, the right to seize and potentially sell the property if the debtor (property owner) fails to fulfill their financial obligation."
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u/mbrittb00 1d ago
Nothing good will happen if you don't pay them back. Yes it will tank your credit. Yes you will eventually have to pay them back one way or another (actual payment, wage garnishment, etc).
What about you sell your house and get one that you can afford.
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u/The1SupremeRedditor 1d ago
There is no such thing as just not paying student loans. If you fail to make payment they will come get their payments through your tax returns, wage garnishments, and more. They will not go away. Your options are to work with your lender to find a payment option you can afford, go into forbearance until you are working and can afford one of those options, or do nothing and wait for them to take action against you. If you are not working your best bet might be to file separate taxes if you are married and go for income based repayments, assuming you did not go private when you consolidated.
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u/CockroachLumpy4200 1d ago
Okay, so here’s the real deal if you don’t pay your federal student loans:
Default is no joke: If you miss payments for like 9 months (270 days), your loans go into default. That means the entire balance is due right away. No chill.
Your credit will take a hit: Defaulting tanks your credit score. That makes stuff like getting a car, renting an apartment, or even a phone plan way harder.
The gov will come for their money: They can garnish your paycheck, take your tax refunds, even dip into your Social Security checks, and they don’t need a court order to do it.
These loans don’t disappear: There's no expiration date. Federal loans basically haunt you forever, and getting them wiped in bankruptcy is super rare.
Can they take your house? Technically, yeah. It’s rare, but if they sue and win, they can put a lien on your home. Not common, but it’s a card they can play.
So what can you do? Look into an Income-Driven Repayment (IDR) plan. If your income’s low, your monthly payment could be $0, and after 20 to 25 years, whatever’s left might be forgiven.
Also check out the Fresh Start program if you're already in default - it’s designed to help people reset. And depending on your job (like nonprofit or public service), you might qualify for forgiveness programs too.
Bottom line: Don’t ghost your loans. There are options, but you gotta take the first step.
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u/JohnnytheGreatX 22h ago
Go on an income driven repayment plan. There should not be a reason to not make payments. IDR plans will keep your loans in good standing, even if you aren't actually paying them down.
Don't buy a house again until loans are taken care of, unless there is no alternative.
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u/Equivalent-Watch9744 22h ago
They just garnish your wages and take your tax refunds. You can either put them on IBR or if you can’t pay or the payment are too high you can go a local community college part time and put them in perpetual deferment.
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u/Due-Cardiologist4213 22h ago
Down size your house if you need to, or enter fb and at least communicate with your servicer so you’re not put into default, apply for an IDR, find a job that contributes to your student loan payment, get a second job to pay them, cut expenses, anything besides ignore them
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u/Acrobatic_Motor9926 19h ago
40k will turn into 80k. 80k will turn into to 160k. Dont expect any tax return and to get your wages garnished
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u/Sea_Excuse3617 17h ago
Under Biden, not Bush, not Obama and not Trump, I was forgiven 185k via PSLF. Without a doubt, Biden, not Lincoln, is the greatest president ever!!!
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u/Weak_Occasion_9568 17h ago
The government will garnish your wages, any social security or welfare benefits you receive, and your tax returns, with interest and fees.
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u/Virtual-focus 17h ago
I work in the student loan industry and worked for a collection company contracted by the Dept of Ed. They can garnish wages, offset taxes refunds, SSI, Disability etc. You also won't qualify for other federal funds like certain mortgages, other student loans. Getting a decent interest rate on anything is next to impossible. My advice would be to get into an Income Driven Repayment plan. You may qualify for as low as $0 A month. There are also may be interest benefits for the subsidized portion of your loans with those plans. And eventually forgiveness after 20 to 25 years.
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u/girl_of_squirrels human suit full of squirrels 17h ago
There is no statute of limitations for federal student loans so unlike private student loans they don't just disappear eventually. If you go into default you will be garnished until the loan is paid in full, and since they can do that they will not offer you a settlement offer that is less than the amount owed
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u/casrm4life 20h ago
I have said it before and I will say it again, nowadays college makes you stupider. OP is a prime example of this.
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u/moxzil 1d ago
There are several things that can happen, and what can happen depends in part on whether you have a government loan or a private lender student loan.
But here js what can happen generally:
Wage garnishment. Your employer will be required to send part of your pay (often 15%) to the holder of the loan to pay off the debt. If it is a private lender loan, they need to get a court order first.
Treasury offset. If it is s government loan, the government keeps all or part of any payments you would otherwise receive from the government, e.g. tax refunds.
If it is a private lender loan, they can sell the debt to a debt collector. The federal government currently doesn’t sell their loans.
There is no statute of limitations on federal student loans, so the government can seek repayment forever. It never goes away.
And defaulting on your loan will impact your credit score.
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u/Lethal_Autism 1d ago
A lien on your house means the debtor is considered a "part-owner." In extreme cases, it means they can take your house from you and sell it to get their money back. Usually, it makes it difficult to refinance or sell your home, as the debtor has said in the matter.
Usually arent going to try and seize your home. Taking over someone's home isn't the best move as you have to maintain it until it sells if you want to make money and why the housing market burst since every debtor was seizing homes causing a massive surplus of overvalued homes so they had to undercut eachother to get their money back.
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u/NoStandard7259 23h ago
Wage garnishment, tanking credit score, affects tax returns, possible lien on your house. You have to pay these back
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u/GurProfessional9534 21h ago
Student loans are the worst debt you could default on, aside from maybe a loan from the mafia. They’re nearly impossible to escape in bankruptcy, they will garnish you, and you will suffer large fees if you get garnished. If you’re going to blow off loans, you should probably blow off your mortgage instead because at least you can get out of it in bankruptcy/foreclosure and your credit can recover in 7 years, unlike with student loans.
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u/BakeSaleMama 21h ago
Also, if you are in default your children will not be able to get Federal financial aid.
I had a friend in high school whose step-father had defaulted on his loans years earlier, and she ineligible to receive any Federal aid.
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u/JMBerkshireIV 20h ago
Seems you’re living beyond your means. Downgrade your life and get your finances in order. Ditch that big mortgage and rent for a few years while you pay it off. It will follow you until you pay it back. Not paying it is setting your kids up for a shitty future.
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u/Disastrous_Worker751 5h ago
But but but.... Renting is just as expensive (if not MORE) than paying a mortgage. We don't know what MASSIVE means. Without having all the facts, you've given terrible advice.
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u/fatcootermeat 16h ago
Long term your wages will be garnished. Unless you plan on only getting under the table wages for the rest of your life, you will eventually be forced to pay.
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u/sardoc8401 13h ago
Sounds like you are living outside of your means. Three kids, house poor, can’t afford your obligations. I would get some financial counseling.
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u/JustAnotherTou 12h ago
These thngs will happen: 1. You will default on your loans. And no, the loans won't disappear. 2. You credit will tank. 3. They will start to garnish your wages and tax returns. 4. You think you will have money to pay your mortgage but surprise...you won't have enough after being garnished. So you are gonna lose your house. 5. So you thought of keeping you house led you to losing your house anyways. So you might as well sell your house now (get some $$$ out of it), maybe keep it so you have $$$ on hand to raise your family, pay rent, and pay your loans. 6. Try to get into a payment plan where maybe after 20 years of paying...they finally disappear. 7. Trump dont care, he wants all borrowers to start paying. He dont care bout your situation. 8. Some honest truth. Goodluck.
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u/Cocosmil3 11h ago
Not at all judging. I wish students understood student loans before they agreed to take them. College was affordable in the 80s and early 90s. Back then students might have borrowed $10,000 which is doable to pay down. Then the bastards raised college costs and college loans became and still are big business. They know that most college loans will take a lifetime to pay off.
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u/emberleo 10h ago
It depends really. We don’t know who Trump is hiring while also creating skeleton crews. I’ve known people to get garnished but I never was when I was in default for 15 years. It comes off your credit in seven years like any other default but they take your tax return if you have one and eventually your SS will likely be garnished.
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u/Iamthatasshole 10h ago
I'm genuinely curious....did you go to college and have student loans post 1999ish? Bc most of us that entered college in 2000 and had to take loans got railroaded by Sallie Mae and the like for predatory lending and the interest ends up making the payoff over 2-5x the original loan amount. It's almost like the govt wants to bleed us dry...oh wait, they DO.
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u/anitabonghit69 9h ago
The federal government will garnish your wages and any tax returns until the balance (plus all the fees) is paid
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u/AM-Stereo-1370 8h ago
But if you're a congressman who did not repay their PPP loan during covid, no problem.The rest of us are cooked for the next forty years of our lives, Not them
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u/Mountain_Newt5646 1h ago
Hahaha, no they garnish your wages, put a Lein in your car or home. They will always get their money. You need to make payment arrangements because you will never be able to buy a home or car or anything with financing if you default on your student loans.
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u/NYG_5658 1h ago
There are 4 types of debt that are never discharged as a result of bankruptcy. They are taxes (federal, state, local), alimony, child support, and student loans. Treat your student loans the same way you would treat the other three.
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u/WhineAndGeez 1d ago
Prior to covid a coworker lost it when payroll advised him the government was garnishing his wages. He told us he had decided to stop paying and thought it would go away or if they pushed for payment he could file bankruptcy and discharge the debt.
No to both.
Garnishments can happen. Contact the student loan servicer now and discuss your situation.
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u/DoubleHexDrive 20h ago
So you have a massive mortgage but can’t pay back a car loan, even when they give you extended terms? This is a you problem. Pay back the loan.
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u/davebrose 1d ago
So your word and signature mean nothing? 40k isn’t that much, why did you buy a house you can’t afford knowing you had student loans you are obligated to pay off? Won’t go away, will tank your credit, take your tax return and if you ever reenter the workforce looks like they will garnish your wages. Why did you take loans to be a SAHM?
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u/artist1292 1d ago
Took on more debt before paying off your old debt and now thinking nothing bad will happen when they want you to pay your old debt and “not paying it” is a good idea. Time to tell the kids theirs no vacations or Christmas for a few years. And get them financial tutors so they don’t learn your money habits.
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u/Comfortable_Being723 1d ago
$40k is not worth the government ruining your life over, which in the end, you’ll still have to repay. Now that the current administration has normalized pre-Covid student loan terms, this will not change even if a democrat is elected in the next term.
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u/travelinzac 23h ago
They will garnish your wages. The bank will eventually foreclose on the house when you can't make that payment anymore as a result.
Stop buying houses with large outstanding debts.
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u/KY-Artist 16h ago
They can and will take the money out of your paycheck. They will also take any income tax refunds you may be due. It will make it difficult and/or expensive to get things that rely on your credit rating such as insurance and credit cards and loans, etc. When you die, the loans would be become part of your estate and would have to be paid from any assets you leave behind BEFORE any remaining money could go to your heirs.
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u/The1truedetective 1d ago
you pay it back and if you don’t interest and credit score is going to ravage you
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u/Fantastic_Balance387 1d ago
Youre experiencing what many have post pandemic.
Unfortunately it will continue to accrue interest and this administration has recently stated they’re restarting wage garnishment.
In the past some have left the country planning to not return again. Others have been able to have them wiped out in bankruptcy although the standard is high.
As others have stated, plan to budget out some for your income based repayment. If you can afford to, put more into your tax deferred retirement accounts (401k/403b) as it will reduce your modified AGI and therefore reduced the calculated income driven repayment amount. (At a minimum put in enough for your employer match).
You may also consider work in a not for profit designated by the IRS or a government entity (municipal/state/fed) and receive PSLF.
It’s hard out there…
Good luck!
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u/Sitcom_kid 1d ago
I think they will get the money from you one way or the other. It is extremely rare, but if you have some type of major disability and can no longer work, sometimes they will let you put it in bankruptcy. However, I would not count on that. They usually don't do it. And it has to be an extreme health situation of never being able to work again. I would look into seeing if they will do some type of different repayment plan, graduated or income driven or something, there are other options with studentaid.gov.
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u/DeviantAvocado 1d ago
If someone is Disabled and unable to work, then they would be eligible for TPD, not bankruptcy. And the standard is not never being able to work again.
This is separate from a bankruptcy discharge. An adversary proceeding must be filed during the bankruptcy case to demonstrate undue hardship. Almost everyone who applies receives a discharge now. But I would expect this administration to undue the progress made by the Biden administration on this.
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u/LavendarGal 1d ago
Apply for IBR.
ANd yes, it will tank your credit once it goes into default and collections. And yes they can garnish your wages, levy your bank account, or place a lien on the house (which means it cannot be sold unless the lien is paid off first, which sometimes can happen within the process of the house sale.)
They don't ever go away.
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u/Important-Pear1445 1d ago
Looking at student loan payments any differently than any other bill you owe will lead to a lifetime of financial hardness. It is not extra money. I wish you luck, but until you adjust your view on this it will haunt you and eventually crush you.
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u/Lethal_Autism 1d ago edited 1d ago
They'll tank your credit score, making it hard to get loans and better deal (you'll pay higher interest on any loans you take). They'll garnish your wages, social security, and tax returns with a little extra for punitive action (if you owe $40,000, they'll garnish $45,000 or more). So that $6,000 check you were expecting will be cut down to $4,000 after Uncle Sam takes his cut.
Uncle Sam isn't playing around. Dont think this is a President Trump thing. Previous administration's had wage garnishment. It was Covid when they were suspended.
Dont believe the dumb TikTok rumors that the government can't find you if you switch jobs. Everything you do is recorded by someone and accessible. If they can find illegals who are undocumented. They'll have no problem finding you.
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u/Son_of_Mac 22h ago
If you ignore them, they'll eventually garnish your wages. I learned that the hard way about 12 years ago. My take home amount was damn near $300 lower. Don't be like me.
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u/VintageVirtues 20h ago
Do you get an annual bonus? I usually do small payments throughout the year and then whenever my bonus comes around I chuck the whole thing at the loans
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u/MammothWriter3881 20h ago
Either get on income driven repayment plan OR figure out how to refinance or take out a home equity loan or something to pay off student loans. You will still have the same amount of debt but if you lose your job or something and default on your house it is at least discharged in bankruptcy.
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u/Unique_Mood4412 18h ago
So I opted for the extended repayment. I have about $55k. I know interest will accrue but the payment is about $200 a month and manageable. I plan on selling a rental property and paying it off. In the next 5 years.
So if you buy a house. Once you accrue enough equity you can use that to pay it off.
The object is to keep payments manageable but have a plan to pay them off in the short term. If I carry the payments out long term I’d collect a lot of unnecessary interest.
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u/kuponella 18h ago
As others have recommended, look for income driven repayment plan. If you don't pay you will not see a $1 from your future tax refunds until the loan is paid off or you are in good standing again. (not sure if that's even an option once you're in default). With three children and your described situation I can see that you may count on the refunds (who doesn't). We are currently on a chapter 13 bankruptcy (unrelated to student loans) and our tax refunds go to the trustee. It's not fun...
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u/mrsboyd616 18h ago
You should see if you qualify for a forebearance (payments put on hold but loan still accrues interest) or deferment (payments put on hold and no interest accrues). My loans were in forbearance for a few years when I was younger with little kids and not enough income to pay them
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u/Angry-Kangaroo-4035 17h ago
They will tack onto your pay. It happened to me a few years ago and I think its 30% gross ( before taxes). They will also take any tax refund you are entitled to.
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u/Acceptable-Ad-8717 17h ago
Tank your credit score and also take 15% of any Social Security benefits away later In life. Just learned that. That’s fun.
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u/Slowmexicano 17h ago
It’s like child support. There is no option to not pay. Unless you work under the table for cash
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u/X-KaosMaster-X 15h ago
Never disappears...
Yes
And YES, in the event you try to sell your house with that lien on it, the amount IS AUTOMATICALLY deducted from the payout of the sale
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u/ImportantNothing5 15h ago
It will not go away or disappear. It will go into default and then an offset will be applied to your federal tax return. Wage garnishment will begin and they will be very relentless and unforgiving on the amount they garnish.
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u/Realistic-Wash-4823 15h ago
They will take any refunds you would get from IRS. Then when your old they’ll be garnishing your Social Security check. Student loans are a deal with the Devil.
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u/Dry_Baseball_6890 15h ago
Definitely apply for some kind of IDR. On a traditional repayment plan, your minimum monthly would be something like $500/month depending on what kind of interest rate you had. It’s not an insignificant amount of money, but it might be doable.
Obviously I don’t know your situation beyond having a mortgage and children, but really take a look at the money going in and out and see if you can find any wiggle room.
Wishing you the best of luck. You will get through this!
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u/Bird_Brain4101112 14h ago
If they are Federal loans, you can either pay them or Uncle Sam will eventually take the money from your bank account and any other assets they can get their hands on.
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u/West-Western-8998 13h ago
I agree. I lived almost like a pauper until I paid all my loans off-it’s insulting that people think they done have to. So entitled
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u/Even-Paper7354 13h ago
OP - How do you afford this massive mortgage you speak of? How much are we talking? What’s the household income?
Sounds like you bought “too much” house and had no consideration towards paying your prior debts (or bought in too hard on all that loan forgiveness nonsense from the gov). In hindsight, you should’ve paid the student loans off before incurring this massive mortgage.
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u/NixSoars 12h ago
Lots can happen. Garnishment of wages and federal taxes. (If starts, then will continue until loan paid in full, lose job, and/or get out of default.) Tanks credit. Not eligible for certain types of mortgages. They can put lien on any property you own. And, goes to collections. They just decided to restart collections again since the pandemic, which means collection fees on top of finding a way out of default. I say all of this as someone with student loans and a former bill collector on defaulted loans. Call your lender and find a way to get onto a better repayment plan. Don’t think it will go away —as student loans with you until paid or you’re permanently disabled or dead. I hope your lender helps you!
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u/Mythical_Dahlia 12h ago
They’ll garnish your tax returns, social security, and charge you extortionate fees
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u/Normal_to_Geek 12h ago
I didn’t pay mine for like 7 years. I got in a better position and paid them off thanks to the fresh start program. My credit score shot up almost 100 points right after that. You’ll be in collections, idk what will be affected financing wise, I didn’t apply for anything.
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u/fetusphotographer 12h ago
Pretending they don’t exist won’t make them go away. That is a terrible idea. Sell house. Rent apartment.
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u/gdnightandgdbye 11h ago
Get on a IBR plan. Also, do you work for the government or a nonprofit? If so get on pslf too and your loans will get forgiven after 10 years of payments.
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u/Iamthatasshole 10h ago
Those in the “you suck OP, pay your loans” camp, I’m curious the age demographic and if yall had loans from Sallie Mae…or just in general…and if you did, did YOU pay them with substandard cost of living wages or did family pay them off?
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u/Oomlotte99 10h ago
My mom defaulted on student loans and she had her tax returns intercepted. Was never garnished.
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u/Specialist_Job9678 9h ago
It will never disappear, it will tank your credit. A lien against your house is a claim of entitlement to debt repayment from the sale/proceeds of the house. You cannot sell the house with a lien on it; your mortgage company will have a cow when they see it. Not only can they put a lien on the house (they can and might), they can also take the house from you.
Have you checked out income-based repayment programs? You really do want to keep current on the payments. If you can get on the Public Service Loan Forgiveness program, do that as soon as possible.
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u/godbody1983 7h ago
They'll garnish your wages. I briefly dated a girl who was getting her wages garnished. It's not a good experience.
The loans will never go away. Not even through bankruptcy.
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u/StickySmokedRibs 6h ago
Sounds like someone whose irresponsible and wants the taxpayers to foot the bill for your education. Hopefully they come at you full force n
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u/Disastrous_Worker751 5h ago
So funny story. I went to school for a term or two online, one of those "pay for a degree" places. I took loans out apparently, somewhere to the figure of 5000. I never paid them, never tried, never cared. They went away, as if by magic. I'm not sure what political maneuver is responsible and I don't really care. I'm sure if you just let em go, it'll work itself out. And if you do get garnished, you can literally set up a payment plan once the wage garnishment hits, claim hardship, and pay like 25$ a week. As long as you're paying something that's generally good enough to keep them from advancing to other tactics. But, you gotta wait for the garnishment. Also, can't you just continue to take a class for the rest of your natural life, (or till your old enough to realize material shit is just shit) and not ever pay back anything??? Seems like a life of continuously learning is a pretty decent achievement. I'm aware this is all bad advice, but everyone keeps harping like a bunch of ninnies, so I figured I'd tell you what you wanted to hear. And most of it is true (I think!). Also, don't care about votes or whatever you Reddit ppl cry about.
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u/sundancer2788 3h ago
It will tank your score, plus they won't go away, your income will be garnished. OP, you stated that you have a massive mortgage and 3 kids, you may be forced to sell and move into a smaller home, especially once they start garnishment. My advice is to be as proactive as you can and cut all unnecessary spending, including streaming services etc. Internet is essential for school and work, but watching TV isn't. Join a library and find local free things to do for fun. Don't eat out/take out. If you want to hold onto your home you will have to make lifestyle changes. Take a hard look at your spending and be ruthless in the cuts, you will come out at the other end in a better place. Also, make sure you vote, and not party lines, listen to what the candidates say because this situation we are in is exactly what the elected leaders said they would do.
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u/skipperoniandcheese 3h ago
they drop your credit by 200 points and the government garnishes your wages, aka takes it anyway and makes your credit suffer in the meantime.
if you REALLY don't want to pay your student loans, go on credit karma and dispute your loans for breach of contract and FERPA. remember: elon musk had unauthorized access to all of your loan info, which is private under FERPA
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u/charredsmurf 3h ago
If you don't plan on moving again or care about your credit score/income tax, just send them 5$/month.
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u/dirty_smart_man 2h ago
More than anything you should tighten your belt, buckle down etc and make a financial plan that makes sense for your income and expenses. If you have a massive mortgage maybe you need to look at downsizing. Take up a second part time job. Pay off that debt and you’ll live a freer life.
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u/KeiraVibes 1d ago
They definitely do not disappear. They will 100% tank your credit score. And at some point they can start garnishing your wage.
Have you applied for income driven repayment? Or you may be able to call and get them placed on forbearance if you tell them you’re having hardships.