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What is Default?
A student loan is defaulted when a borrower fails to make scheduled monthly payments (or make special arrangements with the lender to suspend payments) for a period of 270 days.
Consequences of Default
Defaulting on your student loan has many serious consequences, including the following:
- You can be sued for the entire amount of your loan.
- The default will be reported to national credit bureaus. The damage
to your credit rating will make it difficult to borrow money for a car
or home, or to receive credit cards.
- Federal and State governments will withhold any income tax refunds
you may be due.
- Your wages will be garnished.
- You will become ineligible for any Federal Title IV student aid (unless
you make arrangements to repay what you already owe).
- You may become ineligible for assistance under most other federal
benefit programs.
- You will become ineligible for loan deferments.
- You will become ineligible for Federal interest benefits.
- You will be liable for the costs associated with collecting your loan,
including court costs and attorney fees.
- You may not be able to receive or renew a professional license.
In addition to the consequences listed above, you will still owe on your student loan!
Preventing Default
The good news about default is that it can usually be avoided. Strategies for avoiding a default include:
Before taking out a student loan you should:
- Investigate all of the options that are available to help pay your
educational expenses. These options include, help from parents or relatives,
summer savings, cooperative education programs, and part-time jobs.
In addition you may be eligible for grant, scholarship or work-study
funds. A student loan should be your last option.
- Borrow only the amount you need.
After taking out a student loan you should:
- Be sure to make your loan payments on time. Don't forget to notify
us of any change of address.
- Contact us immediately if you have problems making your loan payments.
We may be able to provide other options.
Other Options
If you do have problems making your monthly loan payments, don't panic. There are several options available to help you avoid defaulting on your student loan, including the following:;
In addition, you may make your payment over the phone
by calling 800-736-5727 and selecting option
2 from the menu or on-line by selecting the on-line payment
link provided on our web page.
Even if you've already defaulted, it's not too
late to contact us and make arrangements to reinstate, rehabilitate, or
consolidate your student loans!
About Our Default Prevention Department
The Department's hours are Monday-Thursday 7:30 AM-9:00 PM CST, Friday from 7:30 AM-5:00 PM, and on Saturday 9:00 AM-1:00 PM.
If you have questions about a defaulted loan, options
to avoid default, or our Default Prevention Program in general, you can
contact us by email
or call us at 800-736-5727 extension 4290.
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