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Avoiding Default

What is default?

  • Default is the failure of a borrower to repay his or her student loans.
  • The point at which a student loan is considered to be in default depends on the type of loan

What are some of the pitfalls of defaulting on a student loan?

  • Involvement of collection agencies.
  • Possible garnishment of wages and tax refunds.
  • Negative mark on credit report.
  • Inability to obtain additional federal financial aid.
  • Potential for legal action.
  • Note: Student loans are generally not dischargeable through bankruptcy.

What is the best way to avoid defaulting on a student loan?

  • Maintain close contact with your lender.
  • Alert your lender of any changes in your financial situation that might affect your ability to make your student loan payments.
  • Depending on your unique circumstances, your lender might be able to help out by applying deferments or forbearances to your loan.
  • In addition, your lender might be able to offer other solutions such as extended repayment, consolidation and more.