Default Loan

Could anyone tell me what it means when a Student Loan goes default? I looked it up on Wiki and I know it means that when the borrower does not pay back a debt. But what happens in this case?

I believe it gets sent to a collection agency and reported to the credit reporting agencies.

Are your loans private or federal? If they are federal you have some options: extended/graduated repayment, income based repayment (IBR), deferment or forbarance. You should call your loan company to see what options are available to you.

There are really no options for private loans - but you should proably call them to explain your situation to see what you can do.

If you default on your loans your credit score will be ruined. If they are federal, they will also garnish your US wages and any tax refunds. 

If your loans are federal loans (from the US) you do not want to default on your loans.  As someone else mentioned, you can get a deferment if your loan is a federal loan, after deferment, you then can get do a forbearance.  I also believe there is one more extension you can get.  So upfront you can get a two year extension.

 If you default on a federal loan.. you will ruin your credit.  If you ever plan to work in the US again, any money you get from tax returns will be claimed by the federal govt until the loan is paid off.  High possibility of your wages being garnished,
The federal government may withhold part of your Social Security benefit payments. (The US Supreme Court upheld the government's ability to collect defaulted student loans in this manner without a statute of limitations in Lockhart v US (04-881, December 2005).)

Your defaulted loans will appear on your credit history for up to 7 years after the default claim is paid, making it difficult for you to obtain an auto loan, mortgage, or even credit cards. A bad credit record can also harm your ability to find a job. The US Department of Education reports defaulted loans to TransUnion, Equifax and Experian.

  You'll be ineligible for deferments and Subsidized interest benefits will be denied.

It is very easy to get a deferment or a forbearance.  Please consider this before defaulting on your student loan/s
 

I hate that I wasn't able to reply until now, I don't have a lot of time to get on this site Here is the email I recieved from the borrower service:

Thank you for your inquiry to ACS's Borrower Services Department.

Our records indicate your loan defaulted and has been transferred to  your Guarantor American Student Assistance. You can contact them at 1-800-343-2120.

If you have any further questions, please feel free to contact us.

Sincerely
Borrower Services E Mail Support

So as you can see my loan has already been defaulted, I had really no say in the matter as I wasn't able to pay it off and therefore it was transferred. I'm pretty sure it was a federal loan. I plan on calling the number once I get a calling card, I don't know how well Skype will work in calling a 1-800 number in the States. I was told that as long as I make an effort to start paying back the loan, it won't effect my ILR. My money situation hasn't exactly improved since I've moved here, but I have to make a way to pay something, so that's what I plan to do.

On a different matter, I would like to take a Web Design Course in which I may be able to set up some payment plan with the college or have to take out a loan to pay for it. I want to do this to further my eduation, where I left off in 2005 (as you can imagine the gap in years), so I can find a better paying job in Web Design. If I do this, will it effect my ILR in any way?

You can use Skype for an 800 number without any problem. Just call them straightaway and see what you need to do to start paying back the loan.

Are you eligible for a Special Direct Consolidation Loan? If available to you it's a nice way of getting rid of a default and lowering your interest rate.

I will try Skype then 

Are you eligible for a Special Direct Consolidation Loan? If available to you it's a nice way of getting rid of a default and lowering your interest rate.

Haven't heard of it, I'll look into it. Thanks!