What are the consequences of defaulting on federal student loans?

Avoiding a default for federal loans is particularly important. One of the key consequences of default is they add 25% to your loan balance and you can actually default more than once. So, if you default twice, you've just increased your loan balance by probably 60%, so that’s a particularly bad idea. One of the things that they also can do is they can garnish wages 15%. They can also take your social security. Not the whole thing, they can't take the first 750 and they can also intercept tax refunds. There are ways to counter all of these and you can cure defaults once you get into it, but it is best to try to avoid the defaults in the first place if you possibly can.