Can I default on my private student loans if I was an international student?
What are the consequences if I ignore the emails? If you ignore the emails they will try harder to collect the money from you until they give up. Unlike what some other people here say, defaulting on a loan is NOT a crime and is NOT the same as stealing. There is a large number of reasons that can make someone unable to pay off a loan. Lenders are aware of the risk associated with default; they will try to collect the debt but at the end of the day if you don't have money/assets there is not much they can do.   As far as immigration goes, there is nothing on a DS-160 form that asks you about bankruptcies or unpaid obligations. I doubt the consular officer will know of this situation, but it is possible. It is not grounds for visa ineligibility however, so you will be fine if everything else is fine. The only scenario in which unpaid student loans can come up relevant in immigration to the US is if and when you apply for US Citizenship. One of the requirements for Citizenship is having good moral character. Having a large amount of unpaid debt constitutes evidence of a poor moral character. But it is very unlikely you'd be denied Citizenship on grounds of that alone.  I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America? Yes, they probably already have.  How would this affect me if I visit America often? Does this mean I would not ever be able to live in America? No. See above. You will have a hard time borrowing again.  Will they know when I come to America and arrest me at the border or can they take away my passport? No. Unpaid debt is no grounds for inadmissibility, so even if the CBP agent knows of it he will not do anything. And again, unpaid debt is not a crime so you will not be arrested. You signed a contract to pay the loan.  You owe the money.   Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them. Explore student loan forgiveness program. Research collections and bankruptcy and how to deal with collection agencies.  There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt.  For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt.  Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt.  Force them to prove that it is your debt.  Force them to prove that they have the right to collect it.  Force them to prove the amount.  Dispute the fairness of the amount.   Doubling your principal in 6 years is a bit flagrant.   So, work with the collectors, establish that the debt is valid and negotiate a settlement.  Or let it stay in default. Your credit report in the US is shot.  It will be a long time before the default ages off your report.  This is important if you try to open a bank account, rent an apartment, or get a job in the US.  These activities do not always require a credit report, but they often do.  You will not be able to borrow money or establish a credit card in the US. Here's a decent informational site regarding what they can do to collect the loan.  Pay special attention to Administrative Wage Garnishment.  They can likely hit you with that one.  You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws. Update:  I am informed that federally funded student loans are not available to international students.  AWG is only possible for debts to the federal government.  Private companies must go through the courts to force settlement of debt.  OP is safe from AWG. What are the consequences if I ignore the emails? That would depend on how much efforts the collection agency is ready to put in. I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America? Possibly yes, they may already be doing it. Will they know when I come to America and arrest me at the border or can they take away my passport? For this, they would have to file a civil case in the court and get an injunction to arrest you. Edit: Generally it is unlikely that the court may grant an arrest warrant, unless in specific cases. A lawyer advise would be more appropriate. End Edits It is possible that the visa would also get rejected as you would have to declare previous visits and credit history is not good.
Only if (or to put it even more bluntly, when) they default. If your friend / brother / daughter / whoever needs a cosigner on a loan, it means that people whose job it is to figure out whether or not that loan is a good idea have decided that it isn't.  By co-signing, you're saying that you think you know better than the professionals. If / when the borrower defaults, the lender won't pursue them for the loan if you can pay it.  You're just as responsible for the loan payments as the original borrower, and given that you were a useful co-signer, probably much more likely to be able to come up with the money.  The lender has no reason to go after the original borrower, and won't.  If you can't pay, the lender comes after both of you. To put it another way:  Don't think of cosigning as helping them get a loan.  Think of it as taking out a loan and re-loaning it to them. "I'd check the terms of the student loan. It's been a long time since I had a student loan, but when I did it had restrictions that it could only be used for educational expenses, which they pretty clear spelled out meant tuition, books, lab fees, I think some provision for living expenses. If your student loan is subsidized by the government, they're not going to let you use it to start a business or go on vacation ... nor are they likely to let you invest it. Even if it is legal and within the terms of the contract, borrowing money to invest is very risky. What if you invest in the stock market, and then the stock market goes down? You may find you don't have the money to make the payments on the loan. People do this sort of thing all the time -- that's what ""buying on margin"" is all about. And some of them lose a bundle and get in real trouble." "Is a student loan a type of loan or just a generic name used to refer to a loan for someone who is going back to school? A student loan from the federal government is a specific type of loan used for education purposes (i.e. attending college). They have guidelines associated with them that are very flexible as compared to a student loan from a private bank.  If a student loan is a different type of loan, does it only cover the costs of going to the school? Every student at a university has a ""budget"" or the ""cost of attendance"". That includes direct and indirect costs. Direct costs are ones billed directly to you (i.e. tuition, room and board - should you choose to live on campus, and associated fees). Indirect costs are such things like books, travel expenses (if you live out of state), and personal things. Direct costs are controlled by the school. Indirect costs are estimated. The school will usually conduct market research to determine the costs for indirect items. Some students go above that, and some go below. For example, transportation is an indirect cost. A school could set that at $500. There are students who will be above that, and some below that. If you choose not to live on campus, then rent and food will become an indirect cost. Student loans can cover up to 100% of your budget (direct and indirect added together). If your total budget is $60,000 (tuition, room and board, transportation, books, supplies, etc.) Then you are able to borrow up to that amount ($60,000). However, because your budget is both direct and indirect costs, you will only be billed for your direct costs (tuition, etc.). So if your direct costs equal $50,000 and your student loan was certified for $60,000, then you will get that $10,000 back in the form of a refund from the school. That does not mean you don't have to pay it back - you still do. But that money is meant for indirect costs (i.e. books, rent - if you're not staying on campus, etc.). If your school is on semesters vs quarters, then that amount is divided between the terms. Summer term is not factored in, that's another process. Also with student loans, there are origination costs - the money associated with processing a loan.  A good rule of thumb is to never borrow more than you need.  Source: I used to work in financial aid at my college." I would be surprised if a bank cared about an undergraduate major. Usually, such things are only important if it is a professional degree, like a law degree or medical degree. The big issue is that if you are not a US citizen, a US bank would be unlikely to make an unsecured loan because you could just return to your country and renege on the loan and they would have no way to collect. Therefore, a bank in your own country might be more logical. If you get accepted by a top Ivy school, they all have financial policies that will allow you to attend regardless of how rich or poor you are, so if you are applying to a top school (Harvard, Princeton, MIT, Stanford, Yale) and get accepted, they will fully finance your attendance. The only exception is if (A) they find out you lied about something, or (B) your parents/family are wealthy and they refuse to pay anything. As long as neither of these two things is true, all of the schools listed GUARANTEE they will provide sufficient financial aid. Princeton even has a no-loan policy, which means not only will they fund your attendance, they will do so without you having to take on any loans. "Please clarify your question. What do you mean by ""..loan in Greece""? If you are referring to taking a mortgage loan to purchase residential property in Greece, there are two factors to consider: If the loan originates from a Greek bank, then odds are likely that the bank will be nationalized by the government if Greece defaults. If the loan is external (i.e. from J.P. Morgan or some foreign bank), then the default will certainly affect any bank that trades/maintains Euros, but banks that are registered outside of Greece won't be nationalized. So what does nationalizing mean for your loan? You will still be expected to pay it according to the terms of the contract. I'd recommend against an adjustable rate contract since rates will certainly rise in a default situation. As for property, that's a different story. There have been reports of violence in Greece already, and if the country defaults, imposes austerity measures, etc, odds are there will be more violence that can harm your property. Furthermore, there is a remote possibility that the government can attempt to acquire your private property. Unlikely, but possible. You could sue in this scenario on property rights violations but things will be very messy from that point on. If Greece doesn't default but just exits the Euro Zone, the situation will be similar. The Drachma will be weak and confidence will be poor, and unrest is a likely outcome. These are not statements of facts but rather my opinion, because I cannot peek into the future. Nonetheless, I would advise against taking a mortgage for property in Greece at this point in time." "Without all the details it's hard to tell what options you may have, but none of them are good.  When you cosign you are saying that, you believe the primary signer will make good on the loan, but that if he doesn't you will. You are 100% responsible for this debt. As such, there are some actions you can take. First, really try to stress to your friend, that they need to get you outta this loan. Urge them to re-finance with out you if they can. Next look for ""better"" ways of defaulting on the loan and take them. Depending on what the loan is for you could deed-in-lue or short sale. You may just have to admit default. If you work with the bank, and try not to drag out the process, you will likely end up in a better place down the line.  Also of importance is ownership. If you pay the loan, do you get ownership of the thing the loan was secured against? Usually not, but working with an attorney and the bank, maybe. For example, if it's a car, can the ""friend"" sign over the car to you, then you sell it, and reduce your debt.  Basically as a cosigner, you have some rights, but you have all the responsibilities. You need to talk to an attorney and possibly the bank, and see what your options are. At this point, if you think the friend is not that much of a friend anymore, it's time to make sure that any conversation you have with them is recorded in email, or on paper." a) Talk to the financial aid counselors at your school. There's a very good chance they have at least a partial solution for you. Let them know your dependency status has changed (if it has). I declared myself to be financially independent from my parents (I really was) and qualified for more aide. b) How much austerity are you willing to endure? I once spent two years eating beans & rice twice a day (lots of protein and other nutrients) while I worked full-time and went back to school to pursue a second degree part-time. I also shunned all forms of recreation (not even a movie) to save money (and so I could focus on staying current with assignments). During another period in my life, I gave up cable, cell-phone, land-line (and used Skype only), and avoided unnecessary use of my car, so I could clear a debt. You'd be amazed at how much you can squeeze from a budget if you're willing to endure austerity temporarily. c) Consider going to school part-time, taking as few as one course at a time if allowed. It's a lot easier to pay for one or two courses than to pay for 4 or 5. It may take longer, but at least you won't lose your credits and it won't take forever. I suppose it depends on the circumstances, but I wouldn't advise it. If you default on a loan to the bank it might ruin your credit, if you default to a family member it has the potential for much more damage in the form of fostering bad feelings and hurt the relationship. I got a credit card as a student with no income, not even a part time job. They called me, I agreed to one thing and they did another and now I have an old credit history. They don't do this anymore. But technically, student loan debt is unsecured? "No idea what you are trying to say here.   You default on a loan, student or otherwise, by not paying.  That is what creates the default, but you still owe it.   Student loans actually can be discharged, but it is very uncommon and an uphill battle.  You have to prove ""undue hardship"" which has a rather high standard.  The last firm I worked at did manage to get a large amount of student loans discharged for someone who was in a car wreck and became a quadriplegic after incurring the student loan.  And even that was not an easy case,  my old firm was actually rather pleased at their success." I completely agree with requirements, like GPA.  I think that weeds some bad loans out, and is a much better version of tough love than non-dischargable debt once you are out of school.    The non-discharged debt problem is tough, and I think this aspect ties into the college cost inflation:  If you, as a lender, basically have a perpetual lien on someone because they can't discharge the debt, then you (lender) can  issue riskier loans, and more of them.  I haven't heard the term 'subprime loans' used to describe student debt, but I think the term is just as applicable to bad student creditors as it was to bad home creditors in the housing bubble.  There seems to be moral hazard involved for lenders that have non-discharge covenants, and so they lend, even after government lenders tell people 'no more.' "You promised to pay the loan if he didn't.  That was a commitment, and I recommend ""owning"" your choice and following it through to its conclusion, even if you never do that again.  TLDR: You made a mistake: own it, keep your word, and embrace the lesson.  Why?  Because you keep your promises.  (Nevermind that this is a rare time where your answer will be directly recorded, in your credit report.) This isn't moralism. I see this as a ""defining moment"" in a long game: 10 years down the road I'd like you to be wise, confident and unafraid in financial matters, with a healthy (if distant) relationship with our somewhat corrupt financial system.  I know austerity stinks, but having a strong financial life will bring you a lot more money in the long run. Many are leaping to the conclusions that this is an ""EX-friend"" who did this deliberately.  Don't assume this. For instance, it's quite possible your friend sold the (car?) at a dealer, who failed to pay off this note, or did and the lender botched the paperwork.  And when the collector called, he told them that, thinking the collector would fix it, which they don't do. The point is, you don't know: your friend may be an innocent party here.  Creditors generally don't report late payments to the credit bureaus until they're 30 days late.  But as a co-signer, you're in a bad spot: you're liable for the payments, but they don't send you a bill.  So when you hear about it, it's already nearly 30 days late.  You don't get any extra grace period as a co-signer. So you need to make a payment right away to keep that from going 30 late, or if it's already 30 late, to keep it from going any later.   If it is later determined that it was not necessary for you to make those payments, the lender should give them back to you.  A less reputable lender may resist, and you may have to threaten small claims court, which is a great expense to them. Cheaper to pay you.  They say France is the nation of love. They say America is the nation of commerce.  So it's not surprising that here, people are quick to burn a lasting friendship over a temporary financial issue.  Just saying, that isn't necessarily the right answer.  I don't know about you, but my friends all have warts.  Nobody's perfect.  Financial issues are just another kind of wart.  And financial life in America is hard, because we let commerce run amok.  And because our obsession with it makes it a ""loaded"" issue and thus hard to talk about.  Perhaps your friend is in trouble but the actual villain is a predatory lender.  Point is, the friendship may be more important than this temporary adversity.  The right answer may be to come together and figure out how to make it work.  Yes, it's also possible he's a human leech who hops from person to person, charming them into cosigning for him. But to assume that right out of the gate is a bit silly.  The first question I'd ask is ""where's the car?"" (If it's a car). Many lenders, especially those who loan to poor credit risks, put trackers in the car.  They can tell you where it is, or at least, where it was last seen when the tracker stopped working.  If that is a car dealer's lot, for instance, that would be very informative.   Simply reaching out to the lender may get things moving, if there's just a paperwork issue behind this.  Many people deal with life troubles by fleeing: they dread picking up the phone, they fearfully throw summons in the trash.  This is a terrifying and miserable way to deal with such a situation.  They learn nothing, and it's pure suffering.   I prefer and recommend the opposite: turn into it, deal with it head-on, get ahead of it.   Ask questions, google things, read, become an expert on the thing. Be the one calling the lender, not the other way round.  This way it becomes a technical learning experience that's interesting and fun for you, and the lender is dreading your calls instead of the other way 'round.  I've been sued.  It sucked.  But I took it on boldly, and and actually led the fight and strategy (albeit with counsel).  And turned it around so he wound up paying my legal bills.  HA!  With that precious experience, I know exactly what to do... I don't fear being sued, or if absolutely necessary, suing.   You might as well get the best financial education.  You're paying the tuition!" It looks like your visa being refused is entirely irrelevant. What happens in bankruptcy is that all the assets of the bankrupt entity are taken over, liquidated, and the proceeds are distributed to the creditors. You're one of the creditors, and as you've been told - the proceeds are not enough to pay all the creditors in full. This is quite common in bankruptcies. What you can do is sue in court and demand priority over other creditors, but... a. You're exactly the same as many other creditors (rest of the students), so why would you get a priority? b. Suing costs money and even if you get more, you'll pay way more for legal fees and expenses. What else can you do? If you paid with a credit card - your credit card company may be able to reverse charges. Sometimes that works, depending on how fast you move. If you paid with a check - your bank may similarly be able to stop payment on the check. This provided it hasn't been settled yet. "This election only applies to payments that you make within 120 days of your having received loan money. These wouldn't be required payments, which is why they are called ""early"" payments. For example, let's say that you've just received $10,000 from your lender for a new loan. One month later, you pay $500 back. This election decides how that $500 will be applied.  The first choice, ""Apply as Refund,"" means that you are essentially returning some of the money that you initially borrowed. It's like you never borrowed it. Instead of a $10,000 loan, it is now a $9,500 loan. The accrued interest will be recalculated for the new loan amount.  The second choice, ""Apply as Payment,"" means that your payment will first be applied to any interest that has accrued, then applied to the principal. While you are in school, you don't need to make payments on student loans. However, interest is accruing from the day you get the money. This interest is simple interest, which means that the interest is only based on the loan principal; the interest is not compounding, and you are not paying interest on interest. After you leave school and your grace period expires, you enter repayment, and you have to start making payments. At this point, all the interest that has accrued from the time you first received the money until now is capitalized. This means that the interest is added to your loan principal, and interest will now be calculated on this new, larger amount. To avoid this, you can pay the interest as you go before it is capitalized, which will save you from having to pay even more interest later on.  As to which method is better, just as they told you right on the form, the ""Apply as Refund"" method will save you the most money in the long run.  However, as I said at the beginning, this election only applies if you make a payment within 120 days from receiving loan funds. Since you are already out of school and in repayment, I don't think it matters at all what you select here.  For any students reading this and thinking about loans, I want to issue a warning. Student loans can ruin people later in life. If you truly feel that taking out a loan is the only way you'll be able to get the education you need, minimize these as much as possible. Borrow as little as possible, pay as much as you can as early as you can, and plan on knocking these out ASAP. Great Lakes has a few pages that discuss these topics:" "According to the FAFSA info here, they will count your nonretirement assets when figuring the EFC. The old Motley Fool forum question I mentioned in my comment suggests asking the school for a ""special circumstances adjustment to your FAFSA"".  I don't know much about it, but googling finds many pages about it at different colleges.  This would seem to be something you need to do individually with whatever school(s) your son winds up considering.  Also, it is up to the school whether to have mercy on you and accept your request. Other than that, you should establish whatever retirement accounts you can and immediately begin contributing as much as possible.  Given that the decision is likely to be complicated by your foreign income, you should seek professional advice from an accountant versed in such matters."