If you anticipate or are having trouble making loan payments, call your lender and ask about changing repayment plans, deferment, forbearance, or discharge options. Otherwise, being delinquent, or late, with payments could have serious consequences and cost you additional money.

If you miss making monthly loan payments for 270 days, you’ll be in default. That means:

• You owe the entire balance of the loan immediately
• You lose eligibility for future federal student aid
• The default shows up on your credit record, damaging your chances of qualifying for other forms of credit
• Your wages may be garnished, or partially withheld by your employer, to pay your loan
• You may be subject to legal action and have to pay attorneys’ fees
• Your account may be referred to a collection agency
• You may have to pay collection fees, which may reach 25% of your outstanding balance
• You may lose your professional license
• You may lose federal and state tax refunds that may be due to you
• You may lose federal and state payments that you might otherwise qualify for

Obviously, the best strategy is to avoid default at all costs. However, if your loan is in default, contact your loan holder and discuss your options for resolving the situation. Usually, that involves paying your balance in full, creating a new repayment plan, rehabilitating your loan, or consolidating your loan.

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