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Defaulting on any student loan such as a Direct or Perkins Loan can have a number of negative impacts, not the least of which, on your credit profile. Credit bureaus report monthly on a borrower’s repayment history. A report of a delinquent or defaulted student loan can have potentially adverse effects on your ability to borrow money, be offered a good interest rate, obtain some types of employment, or even rent a place to live. Default on a student loan will also inhibit your ability to receive on-going financial aid, and so potentially block your academic progress.
Federal regulations governing student loans define a default as “failure of a borrower to make an installment payment due or to comply with other terms of the promissory note or written repayment agreement.”
For the purposes of this “How To”, let’s consider some scenarios that pertain to Direct and Perkins Loans that are delinquent with at least one payment thirty or more days late.
The National Student Clearinghouse (NSLC) aggregates and reports student enrollment data submitted by registrars from around the country. Most colleges and universities will report student enrollment data to the NSLC every session once a student has passed their Add/Drop Period. In some cases, this update does not happen or does not fully resolve the payments outstanding on a student loan account. In addition, a small number of national institutions do not subscribe to the NSLC to report enrollment data.
If your delinquency is being caused by missing or incomplete enrollment reporting
In this situation you can no longer just catch up on missed payments nor ask for deferment or forbearance. The entire balance of the loan plus interest and collection costs are due. So, what can you do?
Note that this is a general guide. We strongly recommend you always communicate directly with your lender regarding your rights and obligations related to your Direct, Perkins or particular type student loan.
(UCLA attempts to provide up-to-date information in our Bruin Dollars and $ense How To Series. Please be aware that the content of this document is based upon information that was correct at the time of publication. All information pertaining to and gathered from both UCLA and other sources is subject to change without notice.)