If you find yourself overwhelmed by debt, you should seek help from your lender/servicer. Do not ignore the problem! Defaulting on a student loan is when a borrower fails to make an installment payment when due or fails to meet any other terms of the student loan promissory note for 270 days or more.

If your loan enters into default, you may suffer the following:

• Legal Action

You may be subject to legal action, which may result in judgments, wage garnishments, asset seizures, and/or property liens (foreclosures). You will also be liable for collection costs and attorney's fees.


• Income Tax Refunds

Your federal and/or state income tax refunds may be used to offset the amount owed on a defaulted loan. A claim may be filed every year against refunds as long as an outstanding balance exists on a defaulted loan.


• Credit Bureaus

Your lender, servicer and/or guarantor will report the defaulted status of your loan to credit bureaus therefore adversely affecting your credit for at least 7 years.


• Deferments

You will be ineligible for deferments and interest benefits.


• Future Financial Aid

You cannot receive assistance from any of the following Federal financial aid programs: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, State Student Incentive Grant, Federal Perkins Loan, Federal Subsidized and Unsubsidized Stafford Loan, or Federal PLUS Loan.

Remember that your lender/servicer may be able to help you before you enter into default. Contact them if you are having problems repaying. They may be able to assist you with possible repayment options or deferment or forbearance programs that can help you maintain a good credit rating.