Student Loan Borrowers who don’t make payments for 270 days
are in default. Defaulting has severe and long-lasting consequences:

• The Department of Education can immediately demand
  repayment of the total loan amount due.
• The Department of Eduction will attempt to collect the debt and
  may charge collection costs.The Department of Education reports
  defaulted loans to national credit bureaus, damaging borrowers’
  credit ratings and, making it difficult for borrowers to make
  purchases such as cars or homes.
• Borrowers with loans in default are ineligible for Title IV
  student aid.
• Borrowers with loans in default are ineligible for deferments.
• The Internal Revenue Service can withhold borrowers’
  Federal income tax refund, including your spouses’.
• Borrowers’ wages may be garnished up to 15% of the gross.
• Borrowers with defaulted FFEL or Direct Loan Program loans may
  be liable for collection costs incurred to collect the loans.

If the holder of the defaulted loan, which may be either the
U.S. Department of Education or a guaranty agency, retains a
collection agency to collect defaulted loans, charges imposed by
the collection agency may be added to the amount borrowers owe.

This means that the amount of the Student Loans may include
collection costs of up to 18.5% of the principal and interest
outstanding on the defaulted loan.

ALL OF THESE THINGS HAPPENED TO ME!

This entry was posted on Friday, November 17th, 2006 at 1:06 am and is filed under Debt Consolidation. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.