Failure to repay a loan according to the terms agreed to when 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.

Student loans are the cheapest money you will ever borrow. Don’t blow it!!!