Delinquency and Default
Borrowers should contact their Direct Loan Servicer immediately if at any point making scheduled loan payments becomes an issue. The servicer can determine if other repayment options, deferment or forbearance are viable options.
Delinquency occurs if monthly payments are not received by the due date. If the account remains delinquent, borrowers will get notification reminding them of their obligation to pay and the consequences of default. Late fees may also be assessed.
Default occurs when borrowers become 270 days delinquent in making loan payments. The consequences of default are very severe and include:
- The entire amount of the loan becomes due and payable
- The default will be reported to national credit agencies and appear on the borrowers' credit history
- Borrowers could be sued
- Wages could be garnished
- Federal tax refunds could be seized
- Eligibility for future financial assistance could be lost
- Borrowers will pay collection fees, court costs and attorney fees
- Professional licenses coud be denied
- Loss of entitlement to repayment, deferment and forbearance options
AVOID default! The number one reason borrowers default is failure to notify the lender/servicer of changes to name, address or phone number. It is imperative that the lenders and servicers have current information.
Always feel free to contact the Augustana Office of Financial Assistance should there be questions or concerns about delinquency or default.