Successful student loan repayment means avoiding delinquency and default. Student loan delinquency occurs on the first day you miss a student loan payment. Student loan default occurs for most federal student loans when you are 270 days delinquent and sooner for other types of student loans.
How to avoid student loan delinquency and default:
- Inform your student loan servicer of changes to your name, mailing address or telephone number so that all correspondence is promptly directed to you.
- Read and keep all documents you receive pertaining to your student loans and be sure to understand your loan amount and required payments.
- If you are experiencing financial hardship and are unable to make your payments, call your student loan servicer for information regarding deferment or forbearance.
Consequences of Delinquency and Default
Your servicer will report your past-due loan payment status to all national credit bureaus and will initiate collection actions against you if you fail to make full, timely payments.
Defaulting on your student loan can result in:
- Long-term damage to your credit rating, which could impact your ability to qualify for other types of loans such as car loans and mortgages
- Referral of your student loan to a collection agency
- Collection costs that you are responsible to pay
- Garnishment of your wages (money deducted from your paycheck)
- Withholding of your state or federal tax refunds to be applied to your defaulted loan balance
- A civil lawsuit against you, which may result in court costs and legal expenses that you have to pay
- Loss of deferment and forbearance options
- Loss of eligibility for financial aid