A defaulted student loan will put you in a complicated situation. You will likely have to repay the loan and your credit will be ruined.

When your student loan goes into default, your account is turned over to collection agencies and various collection procedures begin. In addition, the government can garnish your social security benefits, your wages, and more.

According to a law that Congress created called the Fair Credit Reporting Act, you only have a negative mark on your credit report for a maximum of seven years. Although, these debts can be collected upon for life!

If you have a defaulted student loan on your report you are likely to have to pay interest rates of roughly 25% and place large down payments, just to be approved. More often than not you will be turned away for a new line of credit.

You should dispute the collection marks on your report. There is hope you can remove this mark from your report and, with some luck, you may be able to remove the debt entirely.

A dispute letter should be sent to each bureau containing a reason as to why the mark is not correct. Examples may be the account is paid in full, the mark has already been reported for seven years, not my account, and so forth.

This is the most difficult item to negotiate on a credit report and thus we suggest that you should hire a credit repair service to dispute it on your behalf. The benefit is you will have a licensed attorney fighting for you and there are continuously new laws passed by congress to help protect consumers.

We feel hiring an expert is worth the money since your credit score impacts every aspect of your life. This is a good idea since, compared to the high cost of a low credit score, hiring an expert can be done at very reasonable rates.

Please be aware that a private loan, such as one with Sallie Mae, will be difficult to remove but easier than a federal loan. A loan from the government, such as a Stafford loan or the Perkins loan, will be much harder to remove from your report.

When the bureaus receive your dispute letter they will contact the creator of the negative mark and ask them to verify the debt. They will verify that the account is yours, the dates are correct, and the balance of the account.

If the account can not be verified then the negative mark must be removed from your credit report. This is due to the Fair Credit Reporting Act saying that any unverifiable mark on your credit report must be removed.

It is estimated that 1 in every 4 people have an error on the report that is costing them money in higher interest rates. The bureaus and lenders make errors all the time, but your credit is the one that will suffer. If this mark is in error, be sure to send any documentation that you have with your dispute letter to prove it is in error.

In closing, if you have a defaulted student loan on your credit report, it does not mean you will have a low credit score for the rest of your life. Defaulted student loans are removed from credit reports every day. To do this, we suggest you dispute this mark with the credit bureaus.