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I am browsing the site for information about defaulted student loans.

There is a whole other forum on this site about student debt and options available for controlling it.

Sub: #1 posted on Sun, 09/17/2006 - 19:25

Jedi Mistress Ari Jedi Mistress Ari

(Posts: 2192 | Credits: )

Facing Loan Default

For student loans authorized under Section 435(i)Title IV of the Higher Education Act, default occurs on a Federal Family Educational Loan (FFEL) program loan after a default has persisted for 270 days in the case of a loan repayable in monthly installments or 330 days in the case of a loan repayable in less frequent installments. The change is effective for loans for which the first date of delinquency occurred on or after October 7, 1998. During the delinquency period, your loan holder must exercise "due diligence" in attempting to collect the loan; that is, your loan holder must make repeated efforts to locate and contact you about repayment. If your loan holder????????s efforts are unsuccessful, steps will be taken to place the loan in default and to turn the loan over to the guaranty agency in your state. Your loan holder may "accelerate" a defaulted loan, which means that the entire balance of the loan (principal and interest) becomes due in a single payment.

Once your loan is assigned to a guaranty agency or the U.S. Department of Education (Department) for collection, the following steps may be taken to recover the outstanding balance due:

The U.S. Treasury may offset your Federal and/or State payments to repay your defaulted loan.

You may have to pay additional collection costs after your loan is assigned to a private collection agency for collection.

Also, you may be subject to Administrative Wage Garnishment, whereby the Department will require your employer to forward 15% of your disposable pay toward repayment of your loan.

Federal employees face the possibility of having 15% of their disposable pay offset by the Department toward repayment of their loan through the Federal Employee Salary Offset Program.

The Department may take legal action to force you to repay the loan.

Finally, credit bureaus may be notified, and your credit rating will suffer.
Once a loan is declared in default, you are no longer entitled to any deferments or forbearances. In addition, you may not receive any additional Title IV federal student aid if you are in default on any Title IV student loan until you have made payments of an approved amount for at least six consecutive months. Please see Going Back to School for more information on this topic.

To remove your loan from default, please visit the Repaying section of our site for a complete list of repayment options to assist you.

Sub: #2 posted on Sun, 10/22/2006 - 12:30


(Posts: 1245 | Credits: )

I have a student loan in default. In addition to wage garnishment, can the department of education go after my bank account or my certificate of deposit?

Sub: #3 posted on Mon, 03/05/2007 - 02:23


Yes, I believe they can. They can also take your federal tax refund.

Sub: #4 posted on Mon, 03/05/2007 - 03:26


(Posts: 5263 | Credits: )

And social security income, too.

Sub: #5 posted on Mon, 03/05/2007 - 04:27

Morningstar Morningstar

(Posts: 1633 | Credits: )

I have a student loan in default. In addition to wage garnishment, can the department of education go after my bank account or my certificate of deposit?

They could but probably won't. Seizing these types of assets even for the government requires a judgement. Generally judgements are reserved for balances in excess of $100k and for professionals who are self employed and refuse to pay.

Sub: #6 posted on Mon, 03/05/2007 - 06:01

Moderators Cum Industry Expert
(Posts: 17319 | Credits: )

I posted this earlier in another thread....I hope it helps you.....Good Luck!!!

I was in the process of consolidating my loans, and, was foolishly under the impression that they would base your loan payments according to your adjusted gross income. This is not true....beware....if you are in default and consolidate with them....your payments will be figured on your entire gross yearly income with no consideration whatsoever for any other payments you have....including your home, car, medical, utilities, groceries or anything.

I was led to believe that they would base the payments on what we could afford after our normal living expenses....this is not true....after several phone calls to them....I got the real truth....they do not consider any of your living expensives.....strictly gross income!!

And yes they can garnish wages, tax returns, and also your bank accounts. Pnce again I hope this works out for you and can help in some way.

I myself decided to contact The National Consumer Advocate and locate an attorney. I have listed the link below.

I believe you will also find a link there to help them in lobbying congress fighting the unfair and unjust practices that are currently taking place concerning Student Loan issues!!!

http://www.consumeradvocates.or g/

There is a list there for Attorneys listed in each state that are advocates and have experience in fighting unfair, ridiculous and impossible Student loan payback practices!!!

Sub: #7 posted on Tue, 04/10/2007 - 12:06

Moondanzer Moondanzer

(Posts: 361 | Credits: )

Can the Dept of Ed take your social security back pay for student loans in addition to garnishing?

Sub: #8 posted on Sun, 06/03/2007 - 20:36


Just my opinion, but I think they'd garnish the past month payments at the same rate as present/future monthly benefits. I doubt they'd yoink the whole thing.

Sub: #9 posted on Mon, 06/04/2007 - 02:45

Morningstar Morningstar

(Posts: 1633 | Credits: )

The amount they garnish is something like 15% to 25%.

Sub: #10 posted on Mon, 06/04/2007 - 03:23


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