Money Management FAQ
- What happens if I do not pay back my student loans?
- If you do not pay your student loans, you will go into default status.
- What should I do if I have defaulted on a student loan?
- If you already are in default, find out what your options are.
- What are my repayment options?
- What if I am having trouble paying back my student loan?
- If you think you will not be able to make a payment, contact your loan provider to see what your options are. Learn more about default from the Direct Loan Servicing Center.
- What is Default?
- Failure to repay a loan according to the terms agreed to when you signed your promissory note. Default occurs when you become 270 days delinquent in making a payment on your loan(s). When a direct loan becomes 360 days delinquent, the loan is prepared for transfer to the department’s default resolution group. The consequences of default can be severe.
- What happens if I don't pay my loan back?
- Your loans will become delinquent and will eventually go into default. Default occurs when your loans become 270 days delinquent. The consequences of default are serious and long term. They include a damaged credit rating, loss of eligibility for further federal student aid, withholding of wages and tax refunds, and legal actions (such as lawsuits and wage garnishment) being taken against you.
- What does loan delinquency mean?
- Delinquency status indicates that borrowers' accounts have become past due on payment. This occurs when borrowers' loan payments are not received by the due dates. Accounts remain delinquent until borrowers bring their accounts current with payments, deferments, or forbearances. If borrowers' accounts have become delinquent and the borrowers are unable to make payments, deferments or forbearances should be considered.
- What are the consequences of default?
- Once your loan is assigned to a guaranty agency or the U.S. Department of Education for collection, the following steps may be taken to recover the outstanding balance due.
The Department of the Treasury may offset your federal and/or state tax refunds and any other payments, as authorized by law, to repay your defaulted loan. You may have to pay additional collection costs after your loan is assigned to a private collection agency for collection. Also, you may be subject to Administrative Wage Garnishment, whereby the Department will require your employer to forward 15% of your disposable pay toward repayment of your loan. Federal employees face the possibility of having 15 percent of their disposable pay offset by the Department toward repayment of their loan through the Federal Employee Salary Offset Program. The department may take legal action to force you to repay the loan. Finally, credit bureaus may be notified, and your credit rating will suffer.
- For mailing payments?
- Use the address below for mailing payments. You can make payments at any time on your loans. Be sure to include your Social Security Number (SSN) on your check. Mail payments to the following address:
U.S. Department of Education
Direct Loan Payment Center
P.O. BOX 530260
Atlanta, GA 30353-0260
Please note that this address is a U.S. Postal Service box. Payments cannot be submitted via a private package delivery or courier service such as United Parcel Service (UPS) or Federal Express (Fed Ex). If overnight delivery to the Department is desired, then you must use the overnight delivery services available from the U.S. Postal Service.
Make check, money order, or Euro check payable to:
U.S. Department of Education
Be sure your Social Security Number (SSN) is visible on the front of the check. If you are using a money order, be sure that the borrower's full name, Social Security Number (SSN), and address are printed on the money order. Please do not write any correspondence issues you may have on your check face because we are unable to respond to issues written on the check.
- What is a deferment?
- A deferment is a temporary suspension of a borrower's monthly loan payment. There are many different types of deferments available. During deferment of subsidized loans, principal payments are postponed and interest is not accrued. During deferment of unsubsidized loans, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the principal balance (capitalized) of the loan(s) at the end of the deferment period.
You can get official verification of your enrollment to attach to an in-school deferment form.
- What is forbearance?
- Forbearance are loan payments due to certain types of financial hardships.