What Is Default?

If you miss your regular student loan payments and do not contact your loan servicer to make alternative arrangements, your loans will be considered delinquent.

If you have a delinquent loan, at first you will receive letters and phone calls offering help and information. However, this contact will become demanding and get to be a hassle if you continue to miss payments. The callers are not being mean. They are required by federal regulations to contact you by letter and phone.

You cannot afford to miss any payments without talking to your loan servicer. If you repay your loan monthly, default occurs when you fail to make a payment for 270 days without resolving the issue with your loan servicer. The guarantor of your loan will conclude that you no longer intend to repay the loan and will place it in a default status. If you repay your loan less than once a month, default occurs when you fail to make a payment for 330 days (this applies only to FFEL Program loans).

What Happens if I Default?

The consequences of defaulting on your student loan can be severe. Here are some of the things that could happen:

• You can be sued for the amount you owe, and you will have to pay court costs and attorney fees.
• Your credit rating will be damaged, which means in the future you may not be able to get a credit card or borrow money to buy a car or a home.
• Any federal or state payments due to you, including income tax refunds and lottery winnings, could be automatically directed to pay your loan debt.
• Your wages at your job may be garnished. That means part of your paycheck will automatically go to your student loan payments.
• Your account may be referred to a collection agency, and you will be responsible for paying collection charges.
• You cannot receive further federal financial aid until your default situation is resolved.
• You could be denied assistance from federal benefit programs.
• You will be ineligible for deferments, forbearances and repayment plan options.
• You could be demanded for immediate payment of the entire balance of your loan, plus any unpaid interest.

How Can I Avoid Default?

Communicate with your loan servicer. It's important that you admit when you are in trouble or do not understand something about repaying your student loans. When it looks like you might not be able to make a student loan payment, call them immediately to discuss available options. Those options may include:

• Changing your repayment to better suit your situation
• Requesting a deferment or forbearance to temporarily postpone payments
• Requesting a loan consolidation to lower your monthly payments
• Seeking advice from a Counseling Service

Here are some other tips to help keep you out of default status:

• Make your loan payments on time.
• Set up your loan for electronic withdrawals from your bank account.
• Take advantage of any repayment benefits offered by your loan servicer.
• Notify the loan servicer immediately if you change your address, name or any contact information.
• Keep copies of all records related to your student loans.

Defaulting is bad for you, your lender, your guarantor, your college or university and taxpayers. There are many resources available to help you. All you have to do is ASK!