Imagine having a student loan and repaying it regularly. Then there comes a day where you have some financial misfortune in your life and you skip some payments.
Before you know it you are getting way behind on your payments and the effect on your credit score can end up a disaster.
This excerpt from a letter to Fox News is an interesting read:
Federally granted student loans always start off great, with low interest rates and favorable terms. Keep them in good standing and life is grand. Allow them to descend into default, however, and you get in trouble.
The damage to your credit report begins with your first missed payment, but your credit score really takes a nosedive when the loan defaults. Having the big "D" on a credit report is terribly damaging.
It gets worse when your wages are getting garnished since these payments will not restore your credit score.
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