Delinquency and Default

Basically speaking, these are the worst things in the world for a borrower.

If you are late on a scheduled payment, you are considered to be delinquent on your loan. If you are more than 90 days late, your delinquency will be reported to national credit bureaus.

If you are 270 days late on your scheduled payment, you are in violation of your loan agreement, and it will be assumed that you do not intend to repay your loan. The federal government will buy your loan from your servicer and track you for payment. Defaults are reported to national credit bureaus and remain on your credit report for seven years. This may affect your ability to obtain an auto loan, credit cards, or other financing.

Other consequences include:

• The entire unpaid amount of your loan, including interest, may become immediately due and payable.
• The federal government may collect loan payments from federal and state income tax refunds, garnished wages, or state lottery winnings.
• You will be ineligible to receive any additional federal or state financial aid funds (Federal Pell and Supplemental Educational Opportunity Grants, Work Study, and the Perkins, Subsidized and Unsubsidized Stafford Loans, and/or PLUS loans) at any institution.

Your default will have an effect on the future of this loan program and could jeopardize the educational opportunities of future students.