What are the consequences of defaulting on a student loan?

Defaulting on a student loan, including those offered by CIBC Student Loan Centre, can have significant negative consequences for borrowers. First and foremost, when a student loan is in default, the borrower may face a damaged credit score, which can impact their ability to secure future loans, including mortgages or car loans. A lower credit score can lead to higher interest rates, making it costlier to borrow in the future. Additionally, after a loan goes into default, the borrower may experience aggressive collection efforts. This can include phone calls and letters from collection agencies, and in some cases, wages may be garnished. The borrower may also become ineligible for deferment, forbearance, or other repayment options that could provide financial relief during tough times. Furthermore, defaulted loans may lead to tax refund offsets, where the government withholds tax refunds to repay the defaulted loan. It is also important to note that the total balance of the loan can increase due to accumulated interest and late fees. Overall, it is crucial for borrowers to understand these consequences to effectively manage their financial obligations. For more detailed information or assistance, the official CIBC website can be a helpful resource.