• Loan Default Prevention Tips


    How do I avoid loan default?   


    Avoid loan default by doing the following:

    • Notify your school and the Direct Loan Servicing Center if you change your name (for example, to your married name), local address, permanent address or telephone number.
    • Make your payments on time.
    • Stay in contact with your lender/holder of your loan.
    • Make sure you take advantage of deferments and forbearances when you need them. A deferment is a temporary suspension of your monthly loan payment. There are many different types of deferments available. For more information about deferments, contact the Direct Loan Servicing Center.
    • Borrow conservatively. Calculate your expenses for the semester and/or year and only borrow what you absolutely need.

    You may qualify for a deferment if:

    • You return to school at least half-time at a school that’s eligible to participate in the Department’s Federal Student Aid programs.
    • You are unemployed or meet the rules for economic hardship.
    • You are serving on active duty during a war or other military operation or national emergency, or you are performing qualifying National Guard duty during a war or other military operation or national emergency, and if you are serving on or after Oct. 1, 2007, for the 180-day period following the demobilization date for your qualifying service.
    • You are a member of the National Guard or other reserve component of the U.S. Armed Forces (current or retired) and are called or ordered to active duty while enrolled at an eligible school, or within 6 months after having been enrolled. For this deferment, the deferment period is after the completion of the active duty service.

    If you don’t qualify for a deferment but are temporarily unable to make loan payments for such reasons as illness or financial hardship, you may be eligible for a forbearance. A forbearance also allows you to defer loan payments in certain situations, such as during an illness. Interest is charged on on Direct Unsubsidized and PLUS Loans during all periods of deferment and forbearance. Interest on Direct Subsidized Loans is charged only during periods of forbearance. 

    Learn more about avoiding loan default at: Loan Default

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