Student Financial Services
Difficulty Making Payments & Avoiding Default
Difficulty Making Payments
If you experience financial difficulties or have trouble making your loan payment, don't be afraid to ask for help. Contact our team and your federal loan servicers to understand your options. You may be able to postpone or reduce your payments and avoid defaulting on your loans.
Consequences of Default
The status of your loan account is reported to all of the major credit bureaus every month. A past due or defaulted status will negatively impact your credit history for up to 7 years and will have severe consequences on your ability to obtain a credit card, or financing for a home or car.
In addition, the following actions may be taken:
- You will lose eligibility for additional federal student aid.
- Your student loan debt will increase due to late fees, additional interest, collection fees, and potentially court and attorney’s fees, and any other costs associated with the collection process.
- Your account may be assigned to the Department of Education.
- Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment
- Your tax refunds may be garnished and applied to your defaulted loan.
Avoiding Default
Contact our team and your federal servicer. If you're already past due, the hardest part is making that call.
If you've been having financial difficulty, you may be able to reduce the amount that is past due. Each type of loan offers different options to postpone or reduce repayment. Postpone repayments through deferment if you meet specific eligibility criteria including returning to school, unemployment, economic hardship, or medical residency. Temporarily reduce your monthly payments through forbearance.
Loan consolidation allows you to pay off the outstanding combined balance(s) for one or more federal student loans to create a new single loan. If you consolidate a Federal Perkins Loan, you can become eligible for income-based repayment plans that are not available on the Perkins Loan.
In order to complete Perkins Loan Rehabilitation, you must sign an agreement and make nine on-time monthly payments to bring your loan current. You may only complete Rehabilitation one time. If Rehabilitation is successfully completed (9 monthly payments received on time), the negative credit history is removed from your credit report. Contact our team for details.