One of the most unfortunate things that can happen to graduates is a defaulted student loan, which is when they simply stop making payments. This situation happens more often than people might think, but there are many options to consider before defaulting on a student loan. It is always best to avoid a default student loan, because the United States Department of Education has its own debt collection process that is impossible to escape from.

When a person simply stops paying their student loan, or never begin making payments in the first place, it will no go unnoticed. A defaulted student loan will lead to collection fees, which makes the amount of student loan debt even worse. Having default student loan accounts on a person's credit history can also make it very difficult to get a car loan or a home mortgage for many years to come.

The United States Department of Education works with the Internal Revenue Service to collect defaulted student loan money. This means the amount of student loan debt can be garnished from tax refunds. And once a person does get a job, if they have a default student loan they can expect to have their wages garnishes. It obviously isn't worth it.

There are options for people to deal with their student loan debt without defaulting, though. Often times the lender will defer the student loan, especially if the lender is the United States government. This means that they agree to extend the grace period that a persona has to start paying back their student loan debt, although it can often collect interest. Not everyone is approved for a deferment on their student loan, though, so it's important to apply as soon as possible.

A student loan may have a provision for cancellation, but this is very difficult to do. If a person meets one of the requirements they can apply for a student loan cancellation by completing a form provided by their lender. Some of the qualifications include total disability, death, providing services to needy populations or entering a rehabilitation program. Serving in the armed forces may also allow a person to cancel their student loans debt under certain circumstances. Cancellations are hard to obtain, though, and will always require documentation of the condition or situation.

In order to avoid a defaulted student loan, the debt can also be discharged through certain types of bankruptcy. A person must be able to prove that if they repaid the student loan they would suffer severe financial difficulty. Most loans can only be discharged through Chapter 13 bankruptcies, in which the borrower must repay a portion of their student loan debt.

Regardless of the situation, people need to deal with their student loan problem before it becomes too big to conquer. Never just ignore the problem and end up with a default student loan. Student loan debt never goes away, it will only get bigger and cause more problems in the future.