Avoid default

You must repay your federal student loan.  If you do not make your monthly payments as scheduled – and you do not make any special arrangements with your loan holder/servicer – your loan may go into default.

If you fail to make the required payments on your federal student loan and the account becomes delinquent by a specific number of days (depending on the type of loan you borrowed), it is in default.  Once the loan is in default, the entire balance (principal, interest, and collection fees) is immediately due and payable.

Avoid harsh consequences of default


  • You can be sued for the entire amount of your loan.
  • Your credit rating can be severely damaged, making it difficult to borrow money for a car or home, or to receive credit cards. The default status can remain on your credit report for several years after you pay the loan in full.
  • Your federal Treasury payments (including federal tax refunds) and state income tax refunds may be withheld.
  • Your disposable income can be garnished (administrative wage garnishment) without a court order.
  • You won't be eligible to receive any more federal financial aid (and possibly state aid) unless you make acceptable arrangements to repay what you already owe.
  • You may be ineligible for assistance under most federal benefit programs.
  • You'll be ineligible for deferments or forbearance.
  • You'll be liable for the costs associated with collecting your loan (could be as much as 25 percent of your principal and interest balance), plus court costs and attorney fees.
  • You may not be able to renew a professional license you hold or may jeopardize your chances for certain types of employment.
  • Your loan may be assigned to a professional collection agency.

Prevent default

Default can be avoided:

  • Contact your loan holder/servicer immediately if you start to have problems repaying. They may be able to provide you with some financing options and give you information about deferments and forbearance.
  • Before you take out a loan, make sure you fully understand your options and responsibilities. You should explore and use scholarships, grants, work-study, part-time jobs, and family contributions first to finance your education.
  • Don't borrow more than you need or more than you expect to be able to repay. Develop a sound—and realistic—financial plan.
  • Make your loan payments on time, and notify your lender or servicer when you move or change your address.
  • Keep a record regarding your loan. Make copies of all letters, canceled checks, and any forms you sign.

Already in default?

You do have options.