Columbia University Student Financial Services

Delinquency and Default

Delinquency occurs when a borrower is late with a payment. Default occurs when a borrower fails to make a scheduled payment or meet other terms of the loan agreement and the lender finds it reasonable to conclude that the borrower no longer intends to honor the obligation to repay.

If you default on your federal student loan(s), one or more of the following consequences may occur:

• The lender/holder of your loan may declare the entire unpaid balance, including interest, immediately due and payable.
• You could be required to pay all charges and other costs permitted by law (including reasonable attorney’s fees) for the collection of your loan.
• The lender/holder of the loan may assign the promissory note to a guaranty agency, at which time all amounts due will be payable to the guaranty agency.
• The lender/holder or guaranty agency may report the default to one or all three national, authorized credit bureaus.
• The lender/holder and/or the government may take legal action against you.
• The lender/holder or guaranty agency may report the default to your school.
• You may be unable to receive assistance from federal student aid programs.
• You may become ineligible for various repayment options, deferments, and other benefits.
• Your wages may be subject to garnishment.
• State and federal income tax refunds may be subject to IRS offset and withheld by the federal government.
• Your professional licenses may not be granted or renewed.

Similar consequences may occur if you default on a student loan from a private source.

Forbearance

Forbearance means that the lender may agree to allow you to stop making payments temporarily, to make smaller payments than were previously scheduled, or to extend the time allowed to pay off the loan. If you realize that you may have trouble making loan payments, you should immediately communicate with the lender to explain your circumstances and ask for forbearance.

Bankruptcy

Education loans are not generally discharged by bankruptcy proceedings.