What can happen if you fail to pay your federal student loans?

Failing to pay federal student loans can lead to severe consequences, one of which is that the government has the authority to garnish your wages or tax refunds. This means that if you default on your student loans, the government can take a portion of your income directly from your paycheck or seize your tax refunds to repay the debt.

This practice is part of a collection strategy that the federal government can use when borrowers neglect to make payments. It serves as a powerful incentive to encourage borrowers to stay current on their loans, as the repercussions of non-payment can be significant and long-lasting, affecting financial stability and future economic opportunities.

Other choices presented do not accurately reflect the consequences of failing to pay federal student loans. For instance, while not making payments could adversely affect your credit score, it would not improve; instead, it would likely decrease. Similarly, the repayment terms and conditions wouldn’t require immediate full payment unless the loan has gone into default and specific conditions have not been met, and while losing eligibility for future student loans can occur eventually, it is a longer-term consequence compared to the immediate impact of wage garnishment or tax refund seizure.