Delinquency and Default

Student Loans


Your federal student loan enters its grace period after you have either graduated or dropped below half-time enrollment status with your higher education institution. The grace period is a six month period that allows you to gain employment and contact your servicer about your repayment date and the monthly payment amount. If you do not make a payment, then your student loan becomes delinquent and it can have a hefty toll on your personal life and financial well-being. There are phases of delinquency that increasingly become more harsh and detrimental to your financial well-being. Your lender can and will alert the three primary national consumer-reporting agencies (Equifax, Experian, and TransUnion) of your delinquent account. This will severely affect your ability to buy a new phone, purchase a new car, etc.If an account remains delinquent for an extended period of time (as determined by the type or loan and/or by the lender), it will enter a default status. Default is considered a failure to repay a financial obligation according to contractual terms. Potential negative consequences of default may include wage garnishment, seizure of tax refunds, and a damaged credit score

How to resolve delinquency


There are a couple of methods to resolve your delinquency, first, if you can, you must repay the past due amount (which may include late fees). If you are unable to meet the minimum payments, there are options! There are alternative payment arrangements your loan servicer can offer you. Contact your loan servicer to see which program fits your best, or you can visit our “Repayment Plans” page to see some options before you contact your loan servicer. If you do nothing to resolve your delinquency, your account will fall into ‘Default’ status. When a student loan enters this status, the loan is then sent to a collection agency who will begin the process of collecting the entire loan amount in a single payment. This can result in wage garnishments, seizure of tax returns, lawsuit, severly affect your credit score, adversely affect your spouses finances


It is important to start repayment the right way, do not wait, contact your loan servicer if you have any questions about your federal student aid.