Q: Can not paying back student loans hurt my credit? I have not found a job yet, and my student loans have entered into the repayment period and I am worried about how not making the student loan payments could negatively impact my credit score.
A: Yes, student loans need to be treated the same as any other type of debt (credit cards, auto loans, etc.). Making late payments, missing payments, or making no payments at all on your student loans can and will affect your credit profile negatively. For some individuals, paying back student loans can be a financial burden. If you anticipate not being able to make your student loan payments you should act immediately instead of simply ignoring the student loan payments.
Ignoring or defaulting on student loans can and will tarnish your credit score for years into the future. If you are not making payments on your student loans, lenders may be able to start garnishing your wages, or tax refunds, and even worse, they can go after your cosigner’s assets. Not paying your student loans will not make them go away, and in many cases, not making your student loan payments is only going to make your situation worse. If you suspect you will have problems fulfilling your student loan repayment obligations, the first step you need to take is to contact your lender. Student loan lenders are sometimes willing to work with borrowers to help them meet their financial obligations, and depending on the type of student loans, borrowers may have the ability to defer the repayment period and/or qualify for an income-based repayment plan.