Student loans are choking an entire generation of Americans. For decades, people were encouraged to prioritize higher education, and one of the most effective encouragements was the relatively easy process of getting a loan to pay tuition and living expenses while you earned your degree. I can remember applying for colleges and being absolutely astounded when I received my Financial Aid package—it seemed incredible that the government was willing to give me, a well-known 18-year old idiot, all that cash.
And, frankly, it was incredible. Handing loans to kids like me has led directly to the current situation: 45 million people in this country who owe a collective $1.7 trillion (that’s an average debt of about $38,000). The crisis has been driven by a lot of factors, including the ease of getting a loan, students borrowing the maximum amounts they’re approved for instead of only what they truly need, and a lack of understanding around the repayment process…also, the sheer need for the loan to reach the American dream that they were promised would come with a college education and hard work.
The fact is, a growing number of student loan recipients will be paying off their loans for the rest of their lives. And President Biden canceling some or even all student loan debt is increasingly unlikely, which might prompt you to wonder what would happen if you just…ignored them. What happens if you just stop making payments and go live your life? How long will student loans be a part of your life?
The short answer: Forever. Until you’re dead. In some cases, after you’re dead. The longer answer: It’s complicated.
What to consider if you want to ignore your student loans
Here’s what to consider if you’re thinking of just saying “fuck it” and walking away from your student loan debt:
Your student loans are, you know, loans, so they’re on your credit report and affect your credit score. And they will stay there for seven years after your initial delinquency (the fact that this is the word we use for desperate financial circumstances tells you a lot about capitalism). You probably can’t remove the loan from your credit report unless there’s a serious inaccuracy there, so a delinquent loan will make your credit score look like a batting average, which will affect your ability to get other loans, find employment, rent an apartment, and generally do anything that requires money.
After seven years, the loan can be removed from your credit report, but its negative effects will linger for a while—but the further in the past the loan sinks, the less impact it will have on your credit.
There is one major exception: If your loan is what’s known as a Perkins Loan, it doesn’t get removed from your credit report until it’s paid off, no exceptions. They stopped offering this need-based loan in 2017, however, so if your student loan debt is relatively recent you probably don’t have one of these.
Generally, you can’t discharge student loans during bankruptcy, so even if you’re willing to blow up your financial life, you’ll still likely have those loans to deal with.
There are some ways to have your federal student loans forgiven. The Public Service Loan Forgiveness Program will make your loans go away after 10 years of working for the government or a qualifying non-profit organization while making monthly payments. The key is to keep those monthly payments as low as possible so you get the greatest benefit.
There are also several payment income-driven plans you can sign up for that will make you eligible for loan forgiveness in 20-25 years, even if you haven’t discharged the entire amount…which, yay? You can also get your loans discharged if you qualify as 100 percent disabled or if you work as a teacher and qualify for Teacher Loan Forgiveness. But that’s it.
How ignoring your student loans will affect your future
Let’s say you’re willing to take the credit hit and you’re not concerned about the government hounding you for the money. You stop making payments, ignore all the problems, and use your extra money to buy elaborate luxuries like food and shelter. What happens long-long term?
First of all, keep in mind that removing your loans from your credit report doesn’t mean you are no longer responsible for them. They will stay with you forever unless you pay them off or discharge them via a forgiveness program. Even if your loan has vanished from your credit report, collection agencies may still harass you to pay them off—and if they fail, the federal government may step in to try to collect, and that can be very unpleasant. The government can do stuff collection agencies can’t, like seizing your tax refunds and garnishing your paychecks—and you can’t do much to stop them.
Federal student loans also follow you through retirement. Even if you have them removed from your credit report after seven years and work your whole life, after you reach retirement age and start getting Social Security you’ll still be responsible for your loans, and the federal government can still come after you for them.
And some student loans can follow you to the grave—and beyond. If you had a cosigner (say, a parent) and you pre-decease them, they can be held responsible for the balance no matter how much time has gone by.
The bottom line
You can say “fuck it” and walk away from your student loans—but not without some consequences. After seven years you can erase these delinquent debts from your credit report, which will lift some of the pressure, but the specter of being sued by the government and possibly having your wages garnished will never go away. So, basically, we might have to revise the old saying about death and taxes and add in something about student loan debt, because the government will keep trying.