How does a loan get into default? How does it impact me and my future credit?

Member for

7 years 9 months
Submitted by f2ux2 on

The university may declare a loan to be in default for failure to:

  • Make a scheduled payment when due
  • Submit to the university, on or before the due date of a scheduled payment, documentation of eligibility for forbearance, deferment, or cancellation; or
  • Non-compliance with the terms and conditions of the Master Promissory Note or written repayment agreement.

The consequences for defaulting on a Perkins Loan may include, but is not limited to:

  • Reporting to credit bureaus, delinquent debt collections procedures under Federal law, and litigation
  • Referral to collections agencies and incurring additional charges
  • Loss of eligibility for deferment, forbearance or cancellation benefits
  • Loss of eligibility for future Title IV Federal financial aid (Perkins, Pell Grants, Federal Direct or Federal Family Education Loans, or any other Federal Aid)
  • The loan may be accelerated, and the entire balance declared immediately due and payable, including principal, interest, late fees and collection costs.
  • The loan may be assigned to the Department of Education for collections
  • Inability to order official transcripts until the loan is paid current
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