6 sneaky ways students land in loan trouble
I made payments on time, but I'm in default
Believe it or not, it's possible to do absolutely everything right on your student loan and still default, says Jenna Robinson, director of outreach for The John W. Pope Center for Higher Education Policy in Raleigh, N.C.
"If there is a 'universal default' clause in the loan, then defaulting on credit cards or medical bills or some other kind of debt can allow the lender to treat that borrower as if he or she has defaulted on the student loan and demand payment (for the full loan amount) immediately," Robinson says. "A similar kind of clause is not allowed for credit cards and hasn't been since 2009, but there are fewer protections for student loan borrowers than there are for credit card borrowers."
Federal student loans don't have universal default clauses, Robinson adds, and neither do some private loans. Those who are thinking about getting a student loan from anywhere other than the federal government should research whether their other debts could impact their student loans.