When you default on your Stafford Student loan your credit will be negatively affected and the default will be reported to the credit bureaus affecting your chances of taking further loans out in the future. Once in default there are some things that can happen depending on the terms of your original loan. Regarding the portion of the student loan that has not been paid, you will have to immediately have to pay the entire amount included fees and interest. There could be costs associated with collecting the loan which may be passed on to you the barrower. You as the defaulter will see problems getting Federal student loans in the future because you are too risky of a client. If you supplied references in your original application, these people may be contacted and interviewed to find out where you are and if there are any issues or problems as to why you cannot pay back the loan. If your references were work related or family members this can cause personal problems and embarrassment. The student loan program can even hold your federal and state refunds from income taxes to pay back the unpaid portion of the loan and your employer can be required to put part of your paycheck towards the student loan balance. When you consolidate your loans you will open yourself up to many flexible payment options or you don’t have to default on your loan and you can make easy low monthly payments. The student loan consolidation programs usually require at least a fifty dollar monthly payment.

Here is a good example of what consolidation your student loans can do for you, If your student loan balance is ten thousand dollars you can expect to pay back one hundred and fifteen dollars for ten years. The total amount you will have to repay will be thirteen thousand eighth hundred and ten dollars. If the total outstanding balance of your student loans is fifteen thousand dollars, you will have to pay back twenty thousand dollars seven hundred and fourteen dollars at the end of a ten year repayment period. If you originally barrowed twenty thousand dollars the amounts you will have to pay back at he end of the maximum period of ten years including interest will be twenty seven thousand, six hundred and nineteen dollars. The monthly payment you should be issuing to the barrower is two hundred and thirty dollars. These payments can be further reduced using a highly popular graduated repayment plan. The payments start at reduce amount and increase over time; this is perfect for college students because they usually start making a small salary and their salaries increase over time. The only bad thing about this plan is you will have a greater amount to pay when the loan is finally due a t the end of the loan period. It depends on the individual weather they think this plan is appropriate for them or not.

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