Delinquency and Default with Student Loans

Delinquency and Default
If you fail to make a payment, the government will send you a reminder that your payment is late. If your account remains delinquent, the government will send you warning notices reminding you of your obligation to repay your loan and the consequences of default. Late fees may be added if your payments are late, and your delinquency will be reported to one or more national credit bureaus. Default occurs when you become 270 days delinquent in making payments on your loan.
If you default:
The entire unpaid amount of your loan becomes due and payable.
We will report your default to national credit bureaus.
We may sue you, or take all or part of your federal tax refund or other federal payments, or garnish your wages so that your employer is required to send us part of your salary to pay off your loan, or use a combination of these actions.
You'll have to pay collection fees and costs, plus court costs and attorney fees.
You'll lose eligibility for other federal student aid and most other federal benefit programs.
You'll no longer be eligible for loan deferments (such as deferments while you're in school, unemployed, or experiencing economic hardship).
Staying out of default
Make sure you take advantage of deferments and forbearances when you need them. A deferment is a temporary suspension of your monthly loan payment. There are many different
types of deferments available. For more information about deferments, contact the Direct Loan Servicing Center.
You may qualify for a deferment if:
You return to school at least half-time at a school that's eligible to participate in the Department's Federal Student Aid programs.
You are unemployed or meet our rules for economic hardship.
You are serving on active duty during a war or other military operation or national emergency, or you are performing qualifying National Guard duty during a war or other military operation or national emergency, and if you are serving on or after Oct. 1, 2007, for the 180-day period following the demobilization date for your qualifying service.
You are a member of the National Guard or other reserve component of the U.S. Armed Forces (current or retired) and are called or ordered to active duty while enrolled at an eligible school, or within 6 months after having been enrolled. For this deferment, the deferment period is after the completion of the active
duty service.
If you don't qualify for a deferment but are temporarily unable to make loan payments for such reasons as illness or financial hardship, we may grant you a forbearance. A forbearance also allows you to defer loan payments in certain situations, such as during an illness. We charge interest on Direct Unsubsidized and PLUS Loans during all periods of deferment and forbearance. Interest on Direct Subsidized Loans is charged only during periods of forbearance.
Loan consolidation
You may want to combine multiple federal education loans into a single Direct Consolidation Loan, which may allow you to extend the repayment period. The interest rate for a Direct Consolidation Loan is based on a weighted average of the loans being consolidated. (Note that while extending the repayment period may lower your monthly payments, you may pay more interest over the life of the Direct Consolidation Loan.) Use the following chart to estimate the monthly and total amounts you will repay if you choose to consolidate your federal education loans.