When a federal student loan borrower misses a student loan payment, his or her loan becomes past due, or delinquent. The borrower’s loan account remains delinquent until the missed payment is paid or other arrangements, such as deferment or forbearance, or enrollment in a new repayment plan is made.

When a federal student loan borrower remains delinquent for 90 days or more, the loan servicer will report the delinquency to the three major national credit bureaus. If the borrower continues to be delinquent, the loan may go into default.

When a loan is considered to be in default varies depending on the type of loan.  For loans made under the William D. Ford Federal Direct Loan Program (Direct) or the Federal Family Education Loan Program (FFEL), default begins when the borrower 270 days after the last missed payment.

For a loan made under the Federal Perkins Loan Program, the holder of the loan may declare the loan to be in default if the borrower fails to make a scheduled payment by the due date.

Consequences of Default

  • The entire unpaid balance of the loan and any interest owed becomes immediately due (called “accelerationâ€).
  • can no longer receive deferment or forbearance, and loses eligibility for other benefits, such as the ability to choose a repayment plan.
  • The borrower loses eligibility for additional federal student aid.
  • The default is reported to credit bureaus.
  • The borrower’s tax refunds and federal benefit payments may be withheld and applied toward repayment of the defaulted loan (“Treasury offsetâ€).
  • The borrower’s wages may be garnished.
  • The loan holder can sue in court.
  • The borrower may be charged court costs, collection fees, attorney’s fees, and other costs associated with the collection process.
  • The borrower’s school may withhold academic transcripts until the defaulted student loan is satisfied.

What Should You Hope to Get from Working with Us?

Get Out of Default.

We can work together with you to develop and implement a strategy for getting you out of default and into an appropriate repayment plan.