Avoiding Default

If you're having trouble making payments on your loans, contact your lender as soon as possible. Your lender will work with you to determine the best option for you. Options include:

• Changing repayment plans.
• Deferment: If you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan.
• Forbearance: If you don't meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Read more about deferments and forbearance options.

If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences. Contact your lender regarding options for postponing repayment if you are having trouble making payments.

Consequences of Default If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. The financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe.

Here are some consequences of default:

• National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.
• You would be ineligible for additional federal student aid if you decided to return to school.
• Loan payments can be deducted from your paycheck.
• State and federal income tax refunds can be withheld and applied toward the amount you owe.
• You will have to pay late fees and collection costs on top of what you already owe.
• Your lender may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send them part of your salary to pay off your loan.
• You may be denied a professional license.
• You cannot receive official copies of your JWU academic transcript.

 For more information and to learn what actions to take if you default on your loans, see the Department of Education’s Default Resolution Group.

Cancellation and Deferment Options for Teachers
If you're a teacher serving in a low-income or subject-matter shortage area, it may be possible for you to cancel or defer your student loans. Federal Student Aid offers information about the various forms of payment relief.

Loan Forgiveness for Public Service Employees
Under the Loan Forgiveness for Public Service Employees Program, the borrower must be employed full-time in a public service job during the same period in which the qualifying payments are made and at the time that the cancellation is granted. Federal Student Aid offers information about the various forms of payment relief.