Default Student Loans and How It’s Affected My Life

Default loans are something that no one ever thought would happen to them. As we are all growing up and navigating our paths through life, many of us are experiencing different things in our twenties.

Adulting can be a very beautiful and fun part of getting older. Especially after realizing how much of an adult you’re becoming. Getting your driver’s license, finding which school you’re going to, and even making grown up decisions. Sometimes, the most innocent feeling of adulthood can burst at any moment. Whether that’s not getting accepted into the college of your dreams or that car you wanted isn’t exactly in budget. 

These all can happen on top of many other things that can ruin that feeling. The excitement you could have been feeling in that moment. Deep down, your heart will hurt harder than a heartbreak. Tears will want to come out, and you’ll want to cave into your blanket shutting yourself out from the world.

That’s exactly how I felt and why I’m writing this to share with you all right now. I was just about to get my student loan repayment started when I found out something that broke me. My student loans were reported as default and I had no idea what that meant until I looked it up. 

What Happened Before I Found Out? 

My life up until now has always been a rollercoaster of things going on. But finding out I was default made me feel like I couldn’t do anything in my life. Before I found out about what happened to me, my family and I were discussing our plans for moving. We all had to start being accountable for saving money, building our credit, and setting dates on our calendars.

I was very excited for this upcoming chapter and how being in another state would bring so many opportunities. Things like getting my license, being able to go to the beach again, and so much more that’ll come with it.  Once she left for work after our family meeting, I set up my spot in my room, got ready as if I was going to school, and began working. 

My Financial Hardships and Education

I knew that for me, my biggest financial struggles was that my credit score wasn’t the best. I’m behind on some bills and just now paying some off. In the past, I wasn’t able to fully pay everything on time. I thought I was doing better by prioritizing the higher importance on the financial list. My responsibilities list were rent, utilities, internet, personal bills, and then what I wanted. 

I’ll go more in depth on my current financial state in another post, but this was about my student loans. I did talk about in another post how I did start college online and I paused my education. When I paused it, I ended up working, moving to another part of my state, and so much more.

The Reality of Student Loans Kicked In

For some time, I kept getting alerts on my bank app that I was getting reports on my credit. It was causing my source to drop all the way down in the 400s. That was the one thing I thought for certain what was tanking my source the most. So, I decided to tackle that one first. 

After logging into the financial aid website, I saw that I was reported as default with my student loans. I called immediately the number they had and they explained what I can do. It tore me inside, but I kept thinking that “it’s fine, it’s fine, it’s not so bad.” I called my mom to talked to her on the phone about my options.

Suddenly I cried to her mid conversation… I had realized in that moment that this is something I didn’t know the answer to. There’s nothing more than feeling behind or like your being punished for the choices you make in life. I’ll go a bit further into what I mean about that in a second. 

What does Student Loan Default Mean? 

According to the Student Aid website, your loan goes into default after 270 days (about 9 months) of not making any payment towards your federal loan. When you don’t make your payments or ask for a forbearance, your loan will then get reported as default.

The best way you can get out of default is if you contact your service provider. Let them know what happened as to why you couldn’t pay your loans and they’ll explain what you can do. 

But what happens if your service provider doesn’t have an option for default loan users? This is also what happened with me and my provider doesn’t help anyone who’s loans become defaulted. I found another option that’ll help, but that’s another thing that I too am accountable for, especially not being managing this properly. 

How Has This Default Affected Me?

The effects of your loan being defaulted hurts you more than you could imagine. I can vouch because my credit score is extremely poor now and it got reported immediately to the credit bureaus. After constantly getting alerts on my credit, saying “derogatory account,” which means serious delinquency, failure to pay debts, or public record issues.

I didn’t know what that alert meant at the time, especially since I was working and this is all my fault at the end of the day.

The other thing is that once you’re reported as defaulted, the loan providers will accelerate their “projected” unpaid balance of your loan along with any interest. I also found out that the government can garnish up to 15% your paycheck/wages, take your tax refunds, and even take away federal benefits you may have.

This is so that they can then use that money to pay towards your student loan/debt you accrued and didn’t pay off after that year time limit is up. 

You will then also lose your eligibility for any further financial aid, pell grants, and even loans you may need in the future. Along with your deferment which helps you not get defaulted again, and a chance for forbearance, which is your temporary pause or reduction in loan payments for up to a year. 

How Will I Overcome This?

I know that right now as of this time in my life, it taught me several lessons that I’ll share. Being an adult is truly hard yet beautiful because who would have ever thought to know everything? We are only human beings learning as we go, just like how babies develop as they get older.

We’re meant to get wiser and see that this is only temporary and not forever. With me at the age that I am now, it’s nice to know that there’s time and that I still have a chance to improve. 

This has been a long awaited thing that God has been wanting for me, to become more disciplined in my life. All those days during that 9 months, I could have picked up my phone and called Financial Aid to explain my situation. I could have used that $50 to put towards a repayment plan and helped improve my credit.

Looking back and seeing what I should have done isn’t going to change the past to make it as though it never happened. Just like in my favorite book in the bible, James 1:2-4 MSG, it says: 

Consider it a sheer gift, friends, when tests and challenges come at you from all sides. You know that under pressure, your faith-life is forced into the open and shows its true colors. So don’t try to get out of anything prematurely. Let it do its work so you become mature and well-developed, not deficient in any way.

Everything will be okay and this is nothing to what I could be facing. I’m grateful that it’s nothing too bad, but it does hurt to know that I could be limited in life. I have to be strong, ask God for the guidance I need, and how He can help in this situation. I don’t want to worry because I wasn’t created to worry, but to be joyous and see this is only a hurdle in a marathon. 

Final Lessons and Thank You

That’s all for what I had to share as I learned about one of my current financial hardships. This is one of the many things I know I’ll face that’s yet to come. The only thing I can do is my part in making sure I save and set things up for me to get back on track in life. 

I thank you all for reading and I’ll leave a little chart of some wisdom nuggets you all may want for next time. Whether you’re going through the same thing or didn’t know what “defaulted loan” was until now, I strongly encourage you to stay ahead. Research and learn things because these are crucial things we aren’t taught in school. 

That’s all for now! As always, take care and have an amazing day/evening/afternoon! Bye, everyone!

LOVE, MYA