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Defaulting on your loan has severe and long-lasting consequences. Avoid them by informing the Servicing Center if you think you'll have problems meeting your repayment terms. It's also very important to inform the Servicing Center if your address or telephone number changes so that your payment notices will continue to reach you, and the Center can contact you when necessary.
If you fail to make a payment on time, you're considered delinquent in repaying your loan. If you don't make payments for 180 days, your loan will go into default. If your loan defaults, you will have serious problems. For example
the
U.S. Department of Education can immediately demand repayment of the total
amount due on the loan.
the
Department will attempt to collect the debt and may charge you for collection
costs.
Your
default will be reported to national credit bureaus; negative reports will
damage your credit rating and make it very difficult for you to borrow money or
make purchases such as a car or house. The default notation will remain on your
credit report for up to seven years, even if you arrange to repay the debt
before then-unless you "rehabilitate" the loan .
you
won't receive any additional federal student aid, and you may lose eligibility
for other types of federal aid.
you can't
receive a deferment for your defaulted loans unless you rehabilitate them.
the
Internal Revenue Service can withhold your federal income tax refund(s).
your
wages may be garnished. Obviously, you should avoid default if at all possible.
However, if it happens, you can contact your Servicing Center to make
satisfactory repayment arrangements that will reestablish your eligibility for
federal student aid. Six consecutive, voluntary, on time, full monthly payments
constitute satisfactory repayment arrangements. The payment amounts will be
reasonable and affordable, based on your total financial circumstances.
To rehabilitate your loan-that is, to bring it out of default-you must make 12 consecutive, voluntary, reasonable, and affordable monthly payments under an agreement with the Servicing Center. Once you make these 12 payments, default information will be removed from your credit record.
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Postponing Repayment
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Loan Discharge
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