A little more than 33% of American adults between 18 and 30 have student loan debt. With rising college tuition costs, students are coming out of college with more debt than their parents had at the same age.
Keeping in mind that you cannot default on student loans for several reasons, do your best to pay back the loan to keep yourself in financial favor.
What are the consequences of being in default of any federal student loans? In some states, defaulting on student loans may lead to a suspension of your professional license. Keep reading to learn more about this so you don’t end up losing your job.
What Happens if You Default on Student Loans?
Defaulting on student loans or any loans can lead to a bad credit rating, financial penalties, IRS seizure of your tax refund, garnishment of your wages, and lawsuits in some cases. In some states, your professional license may even be revoked.
Which States Use this Tactic?
Though the following states claim to have the authority to revoke your license, the degree to which the law is enforced varies from state to state, but is it worth taking the chance?
The federal government urged the states to take action to curb the growing trend of young adults defaulting on their student loans in the 1990s.
It’s a Catch-22
The reason you are in debt in the first place is that you took out loans to get a degree in a field that requires a professional license. If you are unable to work in that field because you fell behind on the repayment of your loans, you are unlikely to get ahead.
The best thing to do is to make payments, even if you can’t pay the full amount each month. Avoid becoming delinquent!
With over 5 million people in default on their federal student loans, it seems natural for the government to take drastic action to ensure that loans get repaid. Is there a better way?
Who is at Risk?
Nearly 45 million Americans hold some type of professional license. Teachers, nurses, hairstylists, doctors, and therapists, to name a few, require licensing or certification to work in their field.
Depending on the state, they run the risk of having their licenses revoked, suspended, or even denied if they are in default of their student loans.
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Consequences of Defaulting on Federal Student Loans
Now that you know the consequences of defaulting on student loans, you want to stay on your toes to avoid the risk of losing your professional license.
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