:: What Happens If I Don't Repay? ::
If you are currently behind on your payments, you are considered delinquent. If you don't work with your lender to get your account up-to-date, you could default on your student loan.
Default occurs when:
- Your loan is delinquent for 270 days or more.
- You fail to repay your loan according to the terms agreed upon in your Master Promissory Note.
OR - You fail to submit on-time requests for a deferment or cancellation.
At that point, your loan is purchased and can be collected on behalf of the U.S. Department of Education.
Defaulting on your student loan can result in many negative consequences, including:
- Garnishment of your paycheck. To pay your student loan debt, Administrative Wage Garnishment (AWG) allows up to 15 percent of your wages to be garnished without a court judgment and up to 25 percent of your wages with a court judgment.
- Loss of federal and state tax refunds. State and federal tax refunds and other federal payments may be taken and applied to your defaulted student loan account.
- Loss of deferment and forbearance eligibility. Loan default disqualifies you for deferment and forbearance options. Under normal conditions, your lender may be able to lessen or suspend your payment for a short amount of time to meet your needs.
- Ineligible for student aid. From the date of default, you're not eligible for a federal student loan, a Pell Grant or an Oklahoma Tuition Aid Grant until the default is satisfactorily resolved.
- Addition of attorney fees and collection costs to your loan balance. These fees can add 22 percent to what you already owe. Collection costs are added when no payment or repayment arrangement is made within the first 60 days of default. If you've set up repayment arrangements within the first 60 days of default, collection costs will be added if you become two payments past due.
- Damaged credit rating. After default, you have 60 days to establish satisfactory repayment arrangements. Failure to satisfy the balance within 60 days results in a negative report to national consumer reporting agencies, thereby seriously damaging your credit.
- Transcript hold. Your school can hold your academic transcript if your student loan is in default. The academic transcript is the property of the school and it's the school's responsibility to decide whether to release the transcript to you. Our role is only to inform schools of the account status.
- Potential lawsuit. A civil claim may be filed against you for repayment of your loan.
- Lingering debt. The debt you owe will remain due until you pay it in full. If it's not paid, various agencies and the federal government will continue to seek full payment.
Ready Set Repay and ECMC are dedicated to helping you manage your student loan debt and can help you develop a customized, successful repayment plan. You can reach one of our specialists at 800.298.9490 to discuss your situation. We're also available via email at WeCanHelp@ocap.org.
