Avoiding Default

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Preparing for your future

What is Default?

Default is the failure to pay your loan for 270 days consecutively, according to the legal document you signed when you took out your loan. This legal document is called a Master Promissory Note. Default has serious consequences:

  • Your entire outstanding loan balance will be immediately due
  • Your college records can be placed on hold
  • You will lose eligibility for loan deferment
  • You will no longer be eligible for federal student aid
  • Your credit rating will be ruined
  • Federal and State income tax refunds can be withheld from your return
  • You may have a portion of your wages garnished
  • You may lose or be denied a state professional license
  • You may be sued
  • Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney fees and any other costs associated with the collection process

What is Delinquency?

The first day you miss a payment your loan will become delinquent. You will stay in a delinquent status until you make your payments on time and they become current. 

After 90 days of delinquency, your loan servicer wil report you to the National Credit Bureau. This will negatively affect your credit score which can cause you problems later in life. These problems include, but are not limited to:

  • Buying a house/renting an apartment
  • Buying a car
  • Signing up for utilities
  • Getting different insurance plans
  • Getting a cell phone plan
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