Loan Default Prevention

Students are responsible to repay, in full, all loans used to pay for their education. Repayment of student loans helps ensure the availability of loan funds for the future. Borrowers are encouraged to take the responsibility of loan repayment seriously.

Some helpful hints on avoiding delinquency are as follows:

• Send in the required payment each month even if a bill was not received
• Send in larger or additional payments to reduce the amount of interest paid on the loan. Be sure to indicate that the extra amount should be applied to the principal or used as a future payment.
• Remember that overpaying one month does not mean that the next month’s payment can be skipped or that it will be reduced
• Call your lender/servicer immediately if the payment will not be made on time or in cases of financial hardship. The lender/servicer may be able to work out an alternative plan.
• Know the deferment rights. After sending in the necessary forms, follow up with the lender/servicer to confirm that the appropriate loan(s) has been deferred.
• Understand the borrower’s rights and responsibilities under each loan program. Keep all paper work such as promissory notes, lender correspondence, cancelled checks, etc.
• Always call to resolve a discrepancy
• Never ignore correspondence or requests for payment from the lender/servicer

If a default does occur on the loan(s), in spite of all the arrangements available to prevent this from happening, one or more of the following repercussions may occur:

• The default status may be reported to a national credit bureau and have a negative effect on credit ratings for seven years
• Deferment possibilities may be lost
• Wages may be garnished
• Federal and state income tax refunds may be withheld
• Ineligibility status for any further federal or state financial aid funds
• The entire unpaid amount of the loan, including interest and cost of collection, may become due and payable immediately
• Students may obtain additional information about loan repayment and default prevention guidance from the Financial Aid Office