Failure to repay your student loan(s) results in default. If you don't make any payments on your student loan(s) for 270 days for a monthly installment loan, your loan(s) go into default. If you default on your loan(s), the total amount becomes immediately due and payable - including the original outstanding balance (principal), late fees, and collection fees up to 25% of the outstanding principal and interest may be added to the balance of your loan. At the time of default, all outstanding interest is capitalized (i.e., added to the principal balance).
If your debt is not paid in full, repurchased by the lender or otherwise cancelled within 60 days of defaulting, the debt will be reported to all national credit bureaus as a delinquent defaulted student loan and collection charges will be assessed.
If repayment is begun within 60 days of defaulting, the debt will be reported to all national credit bureaus as a student loan in repayment status.
Defaulting on your federal student loans has extremely negative effects. The following are just some of the consequences:
- negative reports to credit bureaus.
- loss of eligibility for other Federal Student Financial Aid (Title IV aid).
- loss of eligibility for deferments.
- possible wage garnishment.
- possible loss of state and federal income tax refunds.
- possible legal action and assessment of collection charges and attorney fees.
- possible loss of professional license.
For a more detailed list of consequences, read consequences of default. |
