Trouble making payments?
If you are having trouble repaying your loans, contact your loan servicer! In most cases, your loan servicer will work with you to help determine the best option for you. Options include:
- Changing repayment plans – You loan servicer will determine if this option is applicable.
- Deferment – This option allows you to temporarily stop making payments on your loan.
- Forbearance – This option allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. If you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments such as during an illness, you may qualify for forbearance.
What is default?
If you are late on any monthly payment, your loan is considered delinquent and your loan servicer will send you a reminder that your payment is late. Keep in mind that you are responsible for ensuring your loan servicer has your most up-to-date address on file. If you become 270 days delinquent in making your loan payments you will go into DEFAULT.
Consequences of going into default are as follows:
- The entire unpaid amount of your loan becomes due immediately.
- You will lose eligibility for any federal student aid and most other federal benefit programs.
- Your loan servicer will report your default to national credit bureaus which will lower your credit score. This will then result in higher interest rates on future loans you may take out, meaning you would pay back a much higher amount on the loan when it goes into repayment.
- Your loan servicer may sue you, garnish all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send your loan servicer part of your salary to pay off your loan.
- You will have to pay reasonable collection fees and costs, plus any court cost and attorney fees.
- You will no longer be eligible for any loan deferments.
How do I get out of default?
In order to get out of default and restore your eligibility to receive federal student aid, you will need to Contact your loan servicer immediately. If you are unsure who your loan servicer is, you may need to log in to NSLDS to find out: www.nslds.ed.gov. Keep in mind that if you have several defaulted loans with different loan servicers, you will need to contact each servicer individually.
After contacting your loan servicer your options will be as follows:
- Repay or satisfy the loans in full. This will allow you to obtain a paid in full letter from your loan servicer.
- Make six consecutive on-time monthly payments. The monthly payment amount will be determined by your loan servicer. After your sixth on time payment you will be eligible for a reinstatement letter that will restore your eligibility to receive financial aid. A reinstatement may only be granted once by your loan servicer.
- Consolidate your defaulted loans. You will need to contact the Direct Loan Consolidation center to see if your defaulted student loans can be consolidated. Once your loans are consolidated by Direct Loans, you will receive a Loan Summary sheet that must be forwarded to the Office of Financial Aid.
- Rehabilitate your loans through your loan servicer’s loan rehabilitation program. Advantages of rehabilitation include:
- Your loans will no longer be considered to be in a default status.
- The default status reported by your loan holder to the national credit bureaus will be deleted.
- You will be eligible for the same benefits that were available on the loans before the loans defaulted. This may include deferment, forbearance, and Title IV eligibility.
- Wage garnishment ends and the Internal Revenue Service no longer withholds your income tax refund.
To learn more about loan rehabilitation please visit the Department of Ed Default Resolution Group webpage: http://www2.ed.gov/offices/OSFAP/DCS/rehabilitation.html
Once your loans are officially out of default status, you must submit documentation from your loan servicer to the Office of Financial Aid in order for your financial aid eligibility to be restored. Keep in mind that any incomplete or insufficient documentation will hold up your financial aid file.