Default Consequences

Most federal loans enter default when payments are more than 270 days past due. Other loan types may default earlier.

If you are struggling with your loans, you may think 270 days sounds like a long time. Just remember that the consequences of default can impact you even longer.

Student loan default can mean:

  • Your entire loan balance will be due in full, immediately.
  • Collection fees can be added to your outstanding balance.
  • Up to 15% of your paychecks can be taken.
  • Your Social Security, disability income, and state and federal tax refunds can be seized.
  • You will lose eligibility for federal aid, including Pell grants.
  • You will lose deferment or forbearance options.
  • Outstanding fees and unpaid interest can be capitalized (added) onto your principal balance.

Impact on Your Credit

A defaulted student loan is also one of the worst entries that can appear on a credit report. A default entry is far worse than late payments. It can mean that:

  • You may be denied credit cards, car or home loans, or apartment leases.
  • Your interest rate may rise on existing loans and credit cards.
  • Banks may refuse to allow you to open a checking account.
  • You may have to pay more for car or home insurance.
  • You may be unable to obtain or renew a professional license.
  • You may be denied a job due to poor credit.

Get Back on Track

Borrowers have options—like completing a loan rehabilitation program—to help them recover from default. If your loan is in default, ASA® can help determine the best option for you. Contact us today, and take the first step to getting your loan back on track.

When You Will Be Impacted

See how missing payments can impact what you owe—especially when you enter default—by using our delinquency timeline.