• Loan Default

     

    What happens if I default?  

     

    Default occurs when you become 270 days delinquent in making payments on your loan. At the time of default, outstanding interest is capitalized and collection fees may be added, resulting in a loan balance that is higher than the amount borrowed. Borrowers who default on student loans face serious consequences.

     



     

     

    What is loan default?

     

    If a student fails to make a payment, the government will send the student a reminder that their payment is late. If the student's account remains delinquent, the government will send out warning notices reminding the student of their obligation to repay their loan and the consequences of default. Late fees may be added if payments are late, and delinquency will be reported to one or more national credit bureaus. 

    If you default on a loan, the following may occur:

    • The entire unpaid amount of your loan becomes due and payable.
    • Your default will be reported to national credit bureaus.
    • The government may sue you, or take all or part of your federal tax refund or other federal payments, or garnish your wages so that your employer is required to send the government part of your salary to pay off your loan, or use a combination of these actions.
    • You’ll have to pay collection fees and costs, plus court costs and attorney fees.
    • You’ll lose eligibility for other federal student aid and most other federal benefit programs.
    • You’ll no longer be eligible for loan deferments (such as deferments while you’re in school, unemployed, or experiencing economic hardship).



    Information from:
    http://www.mappingyourfuture.com
    http://studentaid.ed.gov

     

      

     


     

     

     

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