Default (typically 270 days behind) triggers the full balance due, wage garnishment WITHOUT a court order, tax refund seizure, and credit damage. But federal loans have real exits: rehabilitation and consolidation.
Federal student loan default is uniquely serious because the government collects without suing: administrative wage garnishment, tax refund offsets, even Social Security offsets — no court judgment needed, powers no private lender has. Default also accelerates the full balance and adds collection costs. But federal loans also offer exits private ones don’t. Rehabilitation: nine agreed, income-based payments returns the loan to good standing and removes the default from your credit report. Consolidation: faster, rolling the defaulted loan into a new one, though the default notation stays. Before either, income-driven repayment might have prevented default entirely — and can keep you out after you’re back.
For federal loans, yes — administrative wage garnishment requires no court judgment. Private lenders must sue and win first.
Rehabilitation removes the default notation from your credit report — one of its main advantages over consolidation, which resolves the default but leaves the record.
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