Default

Failure to repay a loan according to the terms agreed to then you signed a promissory note.* For the FFEL and Direct loan programs, default* is more specific—it occurs if you fail to make a payment for 270 days if you repay monthly (or 330 days if your payments are due less frequently). The consequences of default* are severe. Your school, the lender or agency that holds your loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of your default.* this may affect your credit rating for as long as seven years. For example, you might find it difficult to borrow money from a bank to buy a car or a house. In addition, the Internal Revenue Service can withhold your U.S. individual income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. Also, you may be liable for loan collection expenses. If you return to school, you’re not entitled to receive additional federal student financial aid. Legal action also might be taken against you. In many cases, default* can be avoided by submitting a request for a deferment, forbearance, discharge or cancellation and by providing the required documentation.

Just because you are late in repayment of a loan, it doesn’t mean you are default. Default, to the best of my knowledge means that you have made any contact with the loan company and have not made any payment for a year or more. Contact your financial aide department/bursars office for any questions. Many loan companies will set up a payment plan you can work with because they want to get paid. If in the future you do want to get more student loans, you’d better contact them right away. Your not default yet, but if you aren’t on top of this, you will be.

Good luck

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