DELINQUENT STATUS 

When you take out a loan, you are making a commitment to pay the loan back as (stated on your Master Promissory Note) shown on your bill and by the due date. The first day you miss a student loan payment, your loan becomes past due, or delinquent. You loan remains delinquent until you repay the past due amount (including past interest and other late fees) or making other arrangements, such as deferment or forbearance, or changing repayment plans.  

If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the credit bureaus. If you continue to be delinquent, you risk your loan(s) going into default, and that can have serious consequences as it can greatly affect your credit score.  

If you have a poor credit rating, it can be difficult for you to obtain: 

• Credit cards
• Home or car loans
• Other forms of consumer credit

Note: You may also be charged a higher interest rate than someone with a good credit rating.  

You may also have trouble: 

• Signing up for utilities 
• Getting homeowner’s insurance 
• Getting a cell phone plan 
• Getting approval to rent an apartment (credit checks are usually required for renters) 

 

DEFAULT STATUS

If your loan continues to be delinquent, the loan may go into default. A loan is considered in default when there have not been any payments made on the account after 270 days or nine months. When your loan goes into default, there are some serious consequences, which include the following: 

• The entire unpaid balance of your loan, any interest, and any late fees you owe become immediately due (this is called “acceleration”). 
• You no longer will be eligible to receive a deferment or a forbearance, and you lose eligibility for other benefits, such as the ability to choose a repayment plan. 
• The default status is reported to credit bureaus which damages your credit rating and affects your ability to buy a car or house or to get a credit card. 
• Your wages may be garnished. This means your employer may be required to withhold a portion of your paycheck and send it to your loan holder to repay your defaulted loan.