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Richardson Law Offices
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Default Penalties on Federal Student Loans

There are many bad things that can happen to you if you default on your federal student loans, including Administrative Wage Garnishments (AWGs), tax refund offsets, and Social Security offsets.  But did you know that defaulting can cause your loan balance to go up?

When you default on a loan, it is sent to a debt collector for handling.  When this happens, two things make you pay more on your loan.  The first is the default fee that is assessed and is equivalent to 18.5% of your outstanding balance.  That's right!  If you defaulted owing $30,000, they will pile on another $5,550!

Even trying to stay out of default can make your balance go up!  If you enter into a forbearance, or a deferment with an unsubsidized loan, interest will accrue while you are in the deferment or forbearance and capitalize into principal!

This should make it clear that default is something to be avoided at all costs.  If you live in New Jersey, and you are nearing default (or have already defaulted), contact me right away! I may be able to be of assistance. Just download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it to determine if I can be of assistance and contact you to discuss representation.

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.