What happens (later on) when someone defaults on a student loan?

It isn’t me who is in default, but a relative, and I’m wondering what is likely to happen. Briefly, here’s the situation: He is in his 40’s and the loan was taken out more than 20 years ago. (The original amount was roughly $4K, now up to $12K+ with interest, penalties, whatever.) During that time he has worked a total of exactly one year (well, eleven months), otherwise depending on the support of family, friends, or significant other. (He has some problems, needless to say.) Ironically, it was that year he worked which seems to have brought this issue to the forefront again, with the small “tax rebate” due him in 2001 instead being sent to the dept of education, which caused them to begin pursuing this debt again after at least fifteen years of silence. (FWIW, it is not the DOE per se but a collection agency calling.) He is single with no dependents; he lives with his girlfriend, who supports them both with a regular job. He has exactly three titled assets: one car and one truck, both early 80’s models, neither of which is running; also one small mid-80’s model camper, running, which he travels in and lives in occasionally. No savings, no income of any sort, no property. The house where they both live ordinarily is in her name, both deed and mortgage. All other bills, such as utilities, are also in her name and paid by her. Her income is barely sufficient to cover living expenses, so it’s not as if she can just pay the debt for him to get rid of it. They have no legal relationship, although she does have power of attorney to handle his business affairs. There is no expectation that he will work or have income in the foreseeable future.

I am not advocating the morality of failing to pay one’s debts and obligations – I myself put an astronomical and appalling percentage of my monthly income toward paying off towering debts that taught me a painful lesson in fiscal caution. Neither am I looking for legal advice, which I know is beyond the scope of the board. I’m just wondering if anyone else has ever had any first (or second)-hand experience with something similar, or any idea what recourse the collection agency would utilize in such a situation. I know (I think) that they could get a judgment against him and garnish his wages, if he had any, or garnish government payments like social security, if he had any, or, presumably, put a lien on his house, if he had one, none of which apply. What other things should they be worried about? Can something like a modest camper be seized? Can a person actually go to jail over such an issue? Or are there even more other awful things that the average civilian wouldn’t have thought of?

See http://www.ed.gov/offices/OSFAP/DCS/default/index.html

Defaulting on a student loan is about the same as defaulting on any loan. You run the risk of fines and penalties, wage garnishment, even being sued in court to recover the loan.

Although the above link does not list it (and I’m still trying to find the link in question), defaulting on a (federal) student loan may adversely affect the defaulter’s eligibility for federal assistance (undefined). With the current Administration beholding to big business and not the average person on the street, IMHO one stands a greater chance of being found in default than the previous Administration.

being sued in court to recover the loan

This is what I feared but expected. Is is likely to go so far as a scheduled court appearance? (“No actual legal advice expected” caveat repeated.) Or would the agency be more likely to look at the records, mutter about “getting blood from a stone”, and leave it alone for now?

Duckster,, your response was appreciated!

Maybe he should try declaring bankruptcy. The NOLO website may have info on how to do this cheaply.

Student loan debt is a non-dischargable debt in bankruptcy.
Also this from the other post of same topic…

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Yes he is sponging others money, we all pay taxes and many may want to borrow student loan money in the future. So if every one was to blow off repayment of student loan debt, you would see the availabilty of funds shrink or major obstacles in obtaining a student loan.

In the UK student loans have two methods of non-payment, I think…
If you earn less than a percentage of the national average (up to about £1700 / month at present ) you can defer and not pay back. So you can work in an OK job without worrying about repayments.
Also I believe there is a cut off point for your liability to pay, at 25 years, after which the debt is scrubbed.

Student loans are one of the obligations that bankruptcy does not clear.