What happens if you default on an SBA loan?

What happens to your credit score in you default on a student loan?

• There has been a lot of talk in the news about the student loan crisis. The statistics show that 10% of students who go to public colleges default on their student loans and 25% of students who go to for profit schools. If all these students defaulted on their loans it maybe one of the reasons the U.S. economy isn't recovering. I mean, what happens to these students if they default on a student loan? Are their lives ruined? Can they truly ever come back from that? Is there an answer to this crisis? I am open to suggestions.

• Answer:

  You can't actually "default" and have the debt discharged and forgiven... so while they fall behind in making payments or even stop making payments altogether it does not go away and eventually they will have to resume payments because it does not "age" off the credit reports, can not be discharged in bankruptcy and of course.... the interest keeps getting added to the outstanding balance. Somebody with a huge outstanding student loan balance and no job to pay it off... can be set back decades in achieving their financial and social goals. Everything from moving into their own place to getting a car loan can be in jeopardy and their living standard is extremely poor despite the education and salary potential they were promised when they got their degree.