Consequences of Student Loan Default

de·fault n.
Failure to perform a task or fulfill an obligation, especially failure to meet a financial obligation: in default on a loan.

De·fer·ment n.
A deferment allows you to postpone your scheduled monthly payments if you meet specific requirements.

for·bear·ance n.
If you do not meet the criteria to qualify for a deferment, you may be allowed to temporarily stop making payments with forbearance.
The consequences of student loan default are severe and can include:
  • garnishment of wages
  • seizure of tax refunds
  • long-term damage to your credit score
If loans enter default, there are fewer repayment options available and collection fees of up to 25% may be added to the total cost of your loan, significantly increasing the amount you must repay. 

How to Avoid Default
Depending on your circumstances, you may be eligible for one of the following options:

  • Modified Repayment Plans allow you to make graduated payments or payments based on your income that may temporarily lower your payments and increase the time you may take to repay your student loan(s)
  • Deferment allows you to suspend your payments for a short time if you are disabled, attending school, having financial trouble or are unemployed.
  • Forbearance allows you to suspend your payments for a short time if you are having serious financial difficulties. 
  • Loan Consolidation allows you to combine multiple loans into a single monthly payment and in some cases of financial distress, may even extend the life of the loan to reduce payments.
  • Loan Cancellation or Forgiveness can be an option in very specific circumstances.

If you are having trouble making your payments, contact your lender as soon as possible to explore your options. For more information, visit the Department of Education website at or call 1-800-848-0979 (have your current loan information available prior to your call). For the most accurate information concerning your student loan, including contact information for your lender, the principal balance of your loan and your interest rate, go to the National Student Loan Data System website at

Sinclair cares about your financial wellness and is committed to helping you bring your loan(s) into good standing. We can work with you to determine the payment plan that’s right for you. If you would like our assistance, call me at (937) 512-2856.