Student Loans

When considering borrowing money to help pay your educational expenses, you should seriously consider other options such as: grants, college work-study, and other forms of assistance to help you meet your educational expenses. However, if you are faced with the decision to borrow money from the federal government, there are a few important things you should know about student loans. Most importantly, a student loan is not gift-aid, and it is a serious debt that must be repaid.

When you have make the decision to accept student loan funds, you will be required to complete on-line entrance/exit student loan information sessions. These sessions provide you with information about your rights and responsibilities as a student loan borrower. Furthermore, the loan counseling sessions advise you of your obligations to repay your loans and also the consequences of default.

What is default?

Default- Your student loan account enters default status it has been in a delinquent status for a specified period of time, depending on your individual loan(s). Once you have entered default status, your entire balance, including principal& interest and collections fees are now due in full.

What are the consequences of defaulting on student loans?

You must repay your federal student loans. Your loans enter default status when you’ve failed to maintain the required payments and you have not made other arrangements with your student loan holder. Consequently, your loan(s) will enter default status when your account becomes delinquent within a specified time after the due date.

The consequences of default include:

1. You can be sued for the entire balance.

2. Your credit rating can be severely damaged. (Default is reported to all 3 major credit bureaus).

3. Lien against your federal income, state and federal taxes (federal taxes withheld).

4. Disposable income can be garnished.

5. Ineligible for federal assistance.

6. Ineligible for deferments or forbearance.

1. Loan assigned to a professional collection agency.

How do I avoid default?

First of all, it is important that you consider your ability to repay your loan obligation(s) before you borrow, and also explore other options before you borrow. Keep in mind, a federal student loan is a debt that must be repaid, and there are serious consequences if you do not fulfill your obligations as a student loan borrower. Ways to help you avoid default include:

1. Don’t borrow more money than you need.

2. Make payments on time; contact your loan holder when your address changes.

3. Contact your lender immediately if you anticipate a problem with repaying your loan(s). You may be eligible for deferment or forbearance, which will maintain your loan(s) in current status.

4. Keep all records of your loan(s).

For more information about the consequences of defaulting on student loans, visit: