Financial Services - Cashiers and Student Accounts Office
Defaulting on a Loan
What is default?
Default occurs when a borrower becomes past due in making a payment on his or her loans. Default in the world of student loans has an additional meaning. You are not eligible for more Title IV aid as long as you are in default on a Perkins Loan.
If you are facing a large amount of debt, you might be tempted to skip or delay some of your student loan payments. Your loans have been reported to a national credit bureau and are treated like any other form of credit. Remember, a poor credit report will negatively affect your financial reputation for many years; it could keep you from obtaining a car, a mortgage or even a credit card. Moreover, your report could be used as a basis for hiring by your employers, or it could be used by property, casualty and life insurance companies as a basis for refusing to underwrite your personal property. Therefore, it is most important to do all you can to make your loan payments in a timely manner.
If you fail to make loan payments on time or if you default on your loans, the consequences are serious:
- A very bad credit rating.
- A hold placed on your student records.
- A claim on your N.C. State income tax refund.
- If you are a State Employee, your state employment is subject to termination unless you bring your account current or agree to wage garnishment.
- Your account will be turned over to a collection agency and all collection costs added to your account.
- If you account is not brought current through a collection agency, your account will be turned over to the N.C. Department of Justice for suit and filing and execution of judgement.
- The federal government can sue you and may claim your federal income tax refund.
Don't let this happen to you!
Remember, if you're having trouble making you payments; call your school toll
free at 1-877-877-1983 or University Accounting Service 1-800-999-6227. There
are a number of options that may be available in circumstances of financial
hardship, such as special payment plans or loan forbearance, which
is an arrangement to reduce or postpone
monthly payments for a specified period during which interest still accrues.
In any case, we will work with you to help you avoid the serious consequences
of default.