Student loan default is the result of extended delinquency in repayment of your loan. The failure to repay the loan can adversely affect credit for several years. Even if you successfully negotiate with the lender about the student loan default the loan would become expensive because of the added collection costs. It also affects on getting the federal aid from the government if the necessary payment are not made with the lender for the loan defaulted. Again, this process of settlement can take years and would affect on the studies.
It has become rather difficult to declare the bankruptcy for debtors with ‘The Bankruptcy Abuse Prevention and Consumer Protection Act’ and hence discharging of student loans on the ground of bankruptcy is also near to impossible. The best advice to students would be not to be defaulted for loans because the consequences can be hard.
The one interesting factor about student loan default is there are rehabilitation program to prevent students from getting defaulted. They are useful at any point of your loan cycle and would help you to make the repayments.
With the increase in fees of Public Universities the student loan debt is also seeing a huge increase. In the year 2014, student loan debt exceeded 1.2 trillion U.S Dollars with around 43 million students having student loans of them 7 million debtors are in default. In the year 2013 the college fees in U.S increased by 1.2%. As we know federal student loans can be discharged administratively for total and permanent disability, private student loans cannot be discharged outside of bankruptcy. This limitation hasn’t decreased the loan level and amidst so many restrictions the debtors number has been increasing. William Bennett argued that the increase financial aid as such are enabling universities to charge more fees. Whatever the case may be a student should always be concerned about his loan becoming default.