Are My Student Loans In Default?
Your student loans enter default if you haven’t made payment on them in over 270 days (9 months). Generally, when your loans go into default, they transfer from a student loan servicing company to a collection agency.
Note: If you haven’t been faithful/current with your student loan debt, you could be in default.
Student loans may prove to be more flexible than other types of financing. However, the consequences of falling behind on your repayments can be very unforgiving – especially if you owe federal loans.
It can take may years to rebuild your credit after the effect of default wear off and have unexpected repercussions too. And while there are many ways out of default, there are better alternatives.
How Do I Know If My Student Loans Are In Default?
If you’re still not sure about the question – Are my student loans in default, let’s see some ways by which you can know and some possible consequences too.
Federal student loans in default
A lot of federal student loans get into default when you fail to make a full repayment for 270 days or longer. The one exception is the Perkins Loan Program. In that case, your loan is said to be in default bas soon as you’re late in a single repayment.
Private student loans in default
Typically speaking, your loan is said to be in default after you’re more than 60-90 days late on a repayment, though it depends on your lender (the terms and conditions set by lender determines the duration).
Most times, you can discover when your loan is said to be in default by looking at your promissory note. If it’s not mentioned there, figuring out your lender’s default policy can be hard. Have your account number at hand before reaching out to your lender’s or servicer’s customer service team to get the fastest answer.
13 Consequences Of Defaulting On Your Student Loans
If the answer to the question – Are my student loans in default – is YES , then it can come with the heaviest of consequences, though non-payment on private student loans can give some real hit to your personal finances as well. Here’s what could happen if you’re in default:
- Your full balance will be due immediately.
- The default will go on your credit report.
- You’re no longer eligible for deferment or forbearance.
- You’re no longer eligible for additional federal student loans.
- Your tax refund could be garnished.
- Your federal benefits could be garnished.
- You could lose your driver’s license.
- You may be sued by your servicer or collection agency.
- You’re on the hook for collections and court costs.
- Your wages could be garnished.
- Your school may withhold your academic transcript.
- You could lose your professional license.
- You could lose eligibility for FHA and VA mortgages as well as SBA loans.
You are currently in default on most federal student loans if you do not ,ale payments for 9 months. The total loan balance becomes due once you default. A delinquency period starts on the firwst say after the payment is missed. Your loan holder has certain responsibilities to fulfil when you are delinquent. During the first 15 days, they must send at least 1 collection letter or written notice. At some point, they must also alert you about the availability of the Department of Education Student Loan Ombudsman.
Do You Have A Complaint About A Collection Agency?
The notices and other tactics get more serious the longer you are delinquent. If the delinquency runs on for 9 months, your loan holder will declare you in default. If you are experiencing trouble making payments, reach out to your lender sooner rather than later. If you beginning to experience issues, you should work with your loan holder to postpone payments or find another means to get temporary relief. It is your job to notify you loan holder if you move to a new address.
The government’s extraordinary collection powers kick in only after you default. You will not be eligible for new grants or federal student loans if you are in default on a federal student loan.
Do You Have A Private Loan?
There may exist other consequences of student loan default depending on the loan type and where you reside in. For instance, a number of states allow vocational and professional boards to refuse to certify, certify with restrictions, suspend or revoke a member’s professional or vocational license and, in some cases, impose a fine, when a member defaults on student loans.
Some of these states’ provisions apply to particular professions or vocations such as teachers, insurance professionals, state officers, attorneys, health care professionals, and commercial fishermen. Others apply more generally to anyone whose vocation or profession needs licensing. You should check the laws in your state for more information.
I defaulted on my student loans. What can I do?
There are many ways you can get yourself out of student loans once they become defaulted. Here are some:
- Sign up for student loan rehabilitation. If you’re a federal loan holder, you can get your loan out of default by making 10 consecutive repayments based on your income that are no more than 20 days late. check out our guide to signing up for federal student loan rehabilitation or Contact your servicer to get started.
- Apply for a federal Direct Consolidation Loan. You can also hit the restart button on your defaulted federal student loans by consolidating them into one. This option lets you pick a new, more affordable repayment plan and even change servicers.
- Consider refinancing with a private lender. Private student loan holders might be able to refinance with another lender — though many may need you to be current on your student loan repayments. And you might only qualify with a cosigner.
- Repay your loan in full. If refinancing appears impossible and you don’t have a federal loan, paying off your loan in full might be your only choice — if you have the funds.
Now, we hope we have answered your question- are my student loans in default? We hope to see you next week! Leave your comments and thoughts below.