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|