Default


Default

A loan is in default when the borrower fails to pay several regular installments on time (i.e., payments overdue by 180 days) or otherwise fails to meet the terms and conditions of the loan. If the student defaults on a loan, then the university, the holder of the loan, the state, and the federal government can take legal action to recover the money. This may include garnishing your wages and withholding income tax refunds. Defaulting on a government loan will make the student ineligible for future federal financial aid, unless a satisfactory repayment schedule is arranged, and can affect their credit rating.