What Does Having a Loan in Default Mean?
A loan is in default status when the borrower fails to fulfill the contract or agreement by not making installment payments when due, or by not complying with other terms of the promissory note. This can include filing a deferment or cancellation request in a timely manner.
If you are unable to make your scheduled monthly payments for any reason, contact the Perkins Loan Office as soon as possible.
Consequences of Default
Once a borrower becomes 120 days past due on their Federal Perkins Loan, the following will happen:
- The loan balance will be accelerated and due in full.
- The default status of the loan will be reported to credit bureau organizations.
- The borrower will lose the right to forbearance, deferment, and cancellation benefits.
- The borrower will lose the right to receive additional federal Title IV financial aid at UNO and other institutions.
- The loan may be assigned to a professional collection agency and all costs involved with the collection of the loan will be assessed to the borrower. Collection costs can range from 30 – 50% of the loan balance placed with the agency.
- The loan may be assigned to the United States Department of Education.
- Holds are placed on university records that will prevent the borrower access to his/her transcripts, future enrollment and if applicable, diplomas.
If you default on your Federal Perkins Loan, you may rehabilitate your defaulted loan by requesting the rehabilitation and by making an on-time, monthly payment, as determined by the university, each month for twelve (6) consecutive months. You can rehabilitate a defaulted Federal Perkins Loan only once.
The advantages of successful loan rehabilitation:
- You will again be subject to the terms and conditions of the original promissory note.
- You will qualify for the benefits and privileges of your original promissory note (e.g. deferment, forbearance, and cancellation benefits).
- The default will be removed from your credit history.
- You will have an additional nine years to repay the remaining balance in full.