Government College Student Loans - Consequences of Defaulting School Loan

School loans make it possible for many to attend college, yet many students default on school loans every year. Students go to college in hopes of getting the education that will assure them and their families a better life.

Some colleges claim to help students obtain high-paying jobs in the hopes of luring them to their institutions. The truth of the matter is, unless your father is the President of the company; no one can assure you of a job, after receiving your degree.

When your education does not land your the dream job, and you cannot pay off your college loan you will end up defaulting on your loans. There are some of the consequences of not paying your loan.

There is nothing so hurtful than expected a tax refund, only to receive a letter saying that, you will not receive your money because it has been taken to repay a debt.

Taking your tax refund is one of the methods the Department of Education or loan agencies used to collect on a defaulted debt. You have a right of appeal if this attachment is in error or there are other extenuating circumstances. You have 65 days to appeal the decision.

When you default on your school loans the lender has a right to garnish your earnings. If the financial agency you received you loan from decides to garnish your wages, they have a right to take up to 15 percent of your income. This can be done without a court order. You are, however, entitled to request a hearing within the deadline given.

The Department of Education can sue you to collect on a student loan that has gone into default. The scary thing is there are no time limits on collecting on this debt. This situation can hound you for the rest of your life, unless you get it straightened out. Liens can be placed on property and bank accounts. If you have nothing of value, a judgment will be placed on your credit report.

It may be surprising, but your Social Security benefits and disability benefits can be taken to repay your debt. They can take up to $750 per month out of your benefits. If you receive less than that amount, then this is not allowed.

Again, only 15 percent of your benefits can be taken. You have a right to request a hearing to review your situation, or to claim financial hardship. If you request a hearing, you must provide documentation to prove your claim of hardship.

After spending years in jail to obtain a degree if you default on your loans you can have your license or certification revoked, depending on the state you live in. This apply to those in the medical or legal professional as well as teachers and state workers.