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Consumer Information

Loan Default Consequences and Default Rates

Loan Default Consequences

For a Federal Perkins Loan, default occurs if the student borrower does not make an installment payment when due or does not comply with other promissory note terms. For a Direct or FFEL (Federal Family Educational) Stafford Loan, default occurs if the student borrower becomes 270 days delinquent (monthly payment) or 330 day delinquent (other than monthly payment).

The consequences of default are severe and include:

  • The entire loan balance can be immediately due and payable
  • Loss of deferment options
  • Loss of eligibility for federal student aid
  • Loan account submission to a collection agency with additional interest charges, late fees, collection costs, and possibly court costs and attorney fees
  • Reporting to national credit bureaus and damage to the student borrower’s credit rating
  • Federal income tax refund may be withheld and applied to loan repayment
  • An employer, at request of loan holder, may withhold part of you wages to apply to loan repayment
  • Potential loss of eligibility for professional licensure in some state

If you are having trouble making payments, contact your lender as soon as possible.

For additional FFEL student loan default information for the U.S. Department of Education, visit Federal Student Aid on the web.

FFEL Default Rates (After 2007, FFEL/Direct Rates)

Source: U.S. Dept of Education National Student Loan Data System

Campus FY Being Reported # Entering Repayment # In Default Default Rate
Indianapolis 2010 6667 341 5.1%
  2009 6538 254 5.6%
  2008 5352 176 3.2%
  2007 6463 228 3.5%
  2006 9947 214 2.1%
  2005 9143 148 1.6%
2004 5562 128 2.3%
  2003  5042 110 2.1%
  2002 5127 130 2.5%
  2001 5001 151 3.0%
2000 5397 295 5.4%
1999 5090 224 4.04%
1998 5210 202 3.8%
1997 4918 266 5.4%
1996 4483 271 6.0%
1995 4222 214 5.0%
1994 3832 201 5.2%
1993 3343 136 4.0%