Student loans are typically non-dischargeable in bankruptcy so what happens when you cannot pay your student loans.  If you default on a federal student loan, the Department of Education has several options available to it to collect on the debt.  For example, if you are entitled to a federal tax refund and have defaulted on your student loan, the DOE may take your tax refund to pay the loan. In some cases, the DOE may garnish your wages to collect the debt or seize other federal benefits for repayment.

For more on this topic read, “Consequences of a Student Loan Default.”