which of the following is not true if you default on a student loan?

You can lose your tax refunds, have your wages garnished, and seriously damage your credit if you default on a student loan; what is not true is the common myth that student loans are easily wiped out or automatically discharged in bankruptcy when you default.

What really happens in default

• Your default is reported to credit bureaus and can severely lower your credit score, making it harder to get credit cards, car loans, or a mortgage.

• Your loan can be sent to collections, and you may have to pay significant collection fees, court costs, and attorney fees in addition to the balance and interest.

• The government can take (offset) federal and sometimes state tax refunds and part of certain federal benefits, such as Social Security, and can garnish wages without a court order for federal loans.

The “not true” statement (typical exam-style options)

In many quiz or exam questions built around “Which of the following is not true if you default on a student loan?”, the incorrect statement is usually something like:

• “Your student loans are automatically forgiven or discharged if you default.”
• “Defaulting on your loan will remove your obligation to repay.”
• “Bankruptcy will easily erase your student loan debt once you default.”

These statements are not true: default does not cancel what you owe, and discharge in bankruptcy is rare and requires a separate, difficult legal process.

Other consequences to remember

• You can lose eligibility for new federal student aid and for many deferment, forbearance, or flexible repayment options until you get out of default.

• You may face legal action, such as being sued for the entire balance.

So, if you are looking at multiple-choice answers, the one that suggests default makes the debt go away or is “no big deal” is the one that is not true.