Spokesperson, National Association of Student Financial Aid Administrators
Justin Draeger is Assistant Director for Communications with the National Association of Student Financial Aid Administrators (NASFAA). Prior to joining NASFAA, Justin worked as the lead analyst for the Michigan Guaranty Agency. Justin began his career in student aid 10 years ago working as the financial aid administrator for the Douglas J Aveda Institute in East Lansing, Michigan. Justin earned a Bachelor’s of Science Degree in Resource Management from Brigham Young University and his MBA in Finance from Baker College. He has presented at several conferences in both the financial aid and business management fields and continues to publish nationally. Justin has been tapped for his expertise on student financing by CNBC, Fox Business News, The New York Times, Wall Street Journal, Boston Globe, Kiplinger, Business Week, National Public Radio, and more.
What happens if I do not pay back my student loans?
Justin Draeger with the National Association of Student Financial Aid Administrators explains the penalties associated with not paying back your student loans.
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Host: What happens if I do not pay my student loans?
Justin Draeger: If you go for prolong period without paying back your student loan if you followed the link for several months. Your loan will go into what is called default status, that means your loan provider is so belong to a guarantee agency or the US Department of Education. Those entities will seek to get payments from you through collections and that means that you will be receiving collection calls from collection agencies.
They can also garnish your wages or take future tax refunds. Student loan default is in nobody's interest. If you are in student loan default, you also will not be able to partake in any other Federal Student Aid Program that means the Pell Grant or any other type of loan. It also ruins your credit history. For the loan provider they also do not want to see you go into default. If they have a student that's gone into default, they get reimburse from the government, but at a lesser amount than they would have received had you been a successful student loan borrower who repaid their loans.