Financial Literacy and Default Management
Students begin repaying Federal Direct Stafford loans six months after graduation, leaving school, or dropping below half-time enrollment. Also, students must complete a federally required Exit Counseling before they graduate from HCC, drop below half-time attendance, or withdraw from classes completely. Academic records will be on hold until this is completed.
The Department of Education offers Loan Repayment Plans and Calculators. When the loan comes due, the federal loan servicer will mail a payment schedule with monthly payment of principal and interest, and the unpaid balance for each month it takes to repay the total debt.
U.S. Department of Education
Direct Loan Servicing Center
PO Box 4609
Utica, NY 13504-4609
800-848-0983 (TYY) NSLDS - National Student Loan Data System
Use NSLDS (National Student Loan Data System) to keep track of how much federal funds you borrow
Default is a serious consequence for not repaying your loans. It will occur if you fail to make a payment for 270 days. The school, lender, or agency that holds your loan may take action to recover the money.
Not paying back your student loans can have serious consequences including:
- The lender can require that you repay the entire amount immediately, including all interest, collections, and late payment charges.
- The lender can sue you and can ask the federal government for help in collecting from you.
- The lender can garnish your wages.
- The Internal Revenue Service may withhold your income tax refund and apply it toward your loan repayment.
- You cannot get any additional federal student aid until you make satisfactory arrangements to repay your loan.
- The lender may notify credit bureaus of your default. This may affect your credit rating, which will make it difficult to obtain credit cards, car and/or home loans in the future.
In many cases, default can be avoided by submitting a request for a deferment, forbearance, discharge, or cancellation and by providing the required documentation.
There are several options for repaying your loans if you suffer a financial hardship or other circumstances. Defaulted Student Loan information line: 1-800-621-3115