Avoiding Default

What is Default?

To default means you failed to make payments on your student loan as scheduled according to the terms of your promissory note.

When is a loan placed in default?

In general, a federal student loan is placed in default when a borrower doesn't make a payment and has been unreachable or unresponsive to requests for payment for 270+ days after the first missed payment.

What is a Delinquency Period?

After a borrower misses a payment his/her loan enters a delinquency period. During the delinquency period, the lender must make repeated efforts to locate and contact the borrower about repayment. If the lender is unsuccessful, steps will be taken to place the loan in default.

Loan Repayment Triggers

Graduating, withdrawing or dropping below half-time

Consequences of Default

Unlike other consumer loans, student loans usually can't be discharged through bankruptcy and will likely stay with borrowers for the rest of their lives.

A borrower with a defaulted loan faces these consequences:

• A hold will be placed on all Texas Tech University transcripts until the loan is brought current
• Payment of entire loan balance (principal and interest) becomes due immediately
• Withheld Social Security retirement benefits and disability benefits
• Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney's fees, and any other costs associated with the collection process.
• You will lose eligibility for additional federal student aid
• The status of your loan account is reported to all of the major credit bureaus every month. A past due or defaulted status will negatively impact your credit history
• Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment
• Even if you file bankruptcy, you will still be responsible to make your student loan payments as scheduled.

How do I avoid defaulting on my student loan?

Borrowers who have difficulty making loan payments should contact the lender as soon as possible to see which options are available to them. Borrowers who try to avoid their lender could lose out on some readily available repayment benefits and options.The best way to avoid defaulting on your loan is to make payments on time!Discover steps you can take to repay your federal student loan successfully and avoid going into default.

What if my loan is already in default?

Don't get discouraged! If you are in default on your federal student loan, there are options for getting out of default, including loan repayment, loan rehabilitation, and loan consolidation.

Texas Tech University Default Management Plan

Mark Langford Texas Tech University Default Aversion Manager (806) 834-3875 or finaid.defaultaversion@ttu.edu