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Student Loan Service Center

Default Consequences


Missing payments or making recurring late payments can have serious consequences.

  • Late payments will result in a late charge.  The amount of the charge is determined by the type of loan and the payment amount.
  • Additional collection fees may be assessed by the Student Loan Service Center for activities such as specialized letters, phone calls or credit reporting.
  • The school that issued the loan will place a hold stopping the release of any official academic transcripts or records.
  • Borrowers in default will not be eligible for additional federal financial aid.
  • Loss of deferment and cancellation rights.
  • Late payments of 30 days or more are reported to the National Credit Report Agencies resulting in poor credit history and lower credit scores.
  • After seven months of delinquency the loan may be accelerated resulting in the entire loan balance becoming due in full immediately.
  • The SLSC refers loans to third party collection agencies after seven months of delinquency.  This results in additional contacts from the agencies to request payment, as well as additional collection costs, up to 28% of the total balance. 
    • Once an account is referred to an agency the SLSC cannot work with you to establish a repayment arrangement.

Student loans are not dischargeable through bankruptcy and there is no statute of limitations on legal action or collections.  As a result, unresolved student loan debt can always have negative implications for the borrower.


Options to Avoid Default  


Deferment or Forbearance 

Deferment or forbearance can allow the borrower to delay payments under certain conditions.  Please refer to the Loan Deferment and Forbearance information page for more details.


Some loans have cancellation provisions, also referred to as loan forgiveness.  Please refer to the Loan Cancellation Information page for more details.


Federal regulations allow defaulted loan borrowers to request rehabilitation on their defaulted loans.  If a borrower requests rehabilitation, the Student Loan Service Center will calculate the acceptable rehabilitation payment amount.  The borrower must make nine (9) consecutive, on time, monthly payments of the approved amount to rehabilitate the loan. 

A borrower placed with a collection agency may request the rehabilitation, however they will still be responsible for the collection agency costs.

Once the rehabilitation process is completed the following will occur:

  • The loan will return to regular status, restoring rights and benefits of the promissory note.
  • The National Credit Bureaus will be instructed to remove the default from the borrowers credit history.
  • The borrower's payments will revert back to the original amount.

Borrowers may only rehabilitate a loan ONE TIME, however they may make unlimited attempts.

To request a rehabilitation please email the SLSC.


Borrowers may consolidate (combine all loans into one) eligible Federal Loans through the Federal Loan Consolidation program.  Borrowers can check the National Student Loan Data System to see a full list of their FEDERAL Loans. 

WARNING: If a borrower chooses to consolidate a loan they will lose all Cancellation Rights for that loan. 

Consolidation will not fix a borrower's credit history, however once the consolidation payment is processed the default loan will be reported as paid in full. 

Increase Payment Amount or Frequency

Borrowers who have fallen behind on payments can increase the amount and/or frequency of payments to bring their loans back into current status.  However this will not change past credit history and once a loan has been accelerated that status cannot be changed. 



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