What is default?
If you have Perkins Loans, default occurs if you do not make a payment when due or do not comply with the promissory note’s other terms. For Federal Stafford or Federal Direct Loans, you are in default if you are 270 days late on making a payment.
Default has SERIOUS consequences:
- The entire loan balance (including interest) can be immediately due and payable.
- You will lose your deferment options.
- You will not be eligible for additional federal student aid.
- Your account might be turned over to a collection agency, causing you to pay additional charges.
- Your account will be reported to national credit bureaus, and your credit rating can be damaged.
- Your default will remain on your credit report for up to seven years, making it difficult or even impossible to receive credit card offers, take out car loans, and be eligible for mortgages during that time.
- Your federal income tax refunds may be withheld and applied toward your loan repayment.
- Your employer, at the request of the loan holder, may garnish part of your wages.
- You may be unable to obtain a professional license in some states.