Which of the following is not true if you default on a student loan everfi?

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Defaulting on a student loan can have serious consequences, affecting various aspects of a borrower’s financial life. In this article, we will explore the repercussions of defaulting on a student loan and clarify any misconceptions surrounding this issue.

Consequences of Defaulting on a Student Loan

1. Damage to Credit Score: One of the most significant impacts of defaulting on a student loan is the negative effect on your credit score. Defaulting can lead to a significant drop in your credit score, making it difficult to secure future loans or credit cards. This can also affect your ability to rent an apartment, obtain insurance, or even find employment.

2. Collection Activities: When you default on a student loan, the lender or loan servicer may initiate collection activities to recover the outstanding debt. These activities can include phone calls, letters, and even legal action. Additionally, collection fees and court costs may be added to the total amount owed, further increasing your financial burden.

3. Wage Garnishment: If your student loan remains in default, the lender may seek a court order to garnish your wages. This means a portion of your income will be withheld by your employer to repay the loan. Wage garnishment can significantly impact your financial stability and make it challenging to cover essential living expenses.

4. Loss of Federal Benefits: Defaulting on a federal student loan can result in the loss of certain benefits. For example, you may no longer be eligible for deferment or forbearance options, which provide temporary relief from making loan payments. Additionally, you may lose access to federal financial aid programs if you plan to return to school in the future.

5. Tax Refund Offsets: Defaulted federal student loans can lead to tax refund offsets. This means that any federal tax refund you are entitled to receive may be intercepted and applied towards your outstanding loan balance. It is important to note that this only applies to federal loans, not private student loans.

What is Not True if You Default on a Student Loan

It is not true that defaulting on a student loan will make the debt disappear. Defaulting on a student loan does not erase the debt. Instead, it leads to various consequences, as discussed above. The outstanding loan balance will continue to accrue interest, making it even more challenging to repay the debt over time.


Defaulting on a student loan can have severe and long-lasting consequences. It can damage your credit score, result in collection activities and wage garnishment, and lead to the loss of federal benefits. It is crucial to understand the implications of defaulting and explore alternative options, such as loan rehabilitation or income-driven repayment plans, to avoid these negative outcomes.


– Federal Student Aid: studentaid.gov
– Consumer Financial Protection Bureau: consumerfinance.gov
– U.S. Department of Education: ed.gov