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Don't Default

What is Default?

Default occurs when a borrower persistently fails to make timely payments on their loan as required, to provide documentation or to notify the lender of other relevant conditions that cause them to be unable to pay any loans they have under federal loan programs. Default will seriously harm your credit rating, and your income taxes and/or wages may be withheld, along with other serious consequences.

How Can I Avoid Default?

If you don’t make a payment on time or if you miss making a payment, your loan is delinquent and late fees may be assessed. Even if you are delinquent on your loan, you may still be able to avoid default, so it’s important that you contact GSM&R immediately.

1. Consider a New Repayment Plan

You have a choice of several repayment plans that are designed to meet your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Get details about repayment plans and calculate your estimated repayment amount under each of the different plans.

2. Deferment or Forbearance May Help You

Deferment and forbearance offer a way for you to temporarily postpone or lower your loan payments while you’re back in school, in the military, experiencing financial hardship, or in certain other situations. Find out more about deferment and forbearance.

3. Loan Discharge & Forgiveness Programs

In circumstances such as certain kinds of teaching service, total and permanent disability, or the closure of the school where you were studying, your obligation to repay your federal student loan may be removed. Learn about forgiveness, cancellation, or discharge of federal student loans due to these and other situations.

4. Consolidation Repayment Options

A Consolidation loan allows you to combine multiple federal education loans into one loan and make a single payment each month. The amount of time you have to repay your loan may be extended, depending on the total amount of your education debt. For more information, visit

How can Default Impact You?

Defaulting on your federal student loan is a serious matter. It affects your credit rating and can cause numerous problems for you in years to come. For example, some employers will check your credit history before hiring you. A default can prevent you from getting a loan to buy a car or a house. The consequences of the failure to repay the loan include a damaged credit rating for at least seven years, loss of generous repayment schedule and deferment options, and possible litigation against you and/or any endorser/co-maker/co-borrower on your loan. In the event of default, your guaranty agency purchases the loan from your lender and begins collection activity against you. This activity may include (but is not limited to):

  • Continued contact with you by the collection agency until your loan is fully paid
  • Reporting your default to a credit bureau
  • Loss of eligibility for further Federal Title IV student assistance
  • Tax refunds can be intercepted
  • Garnishing your wages
  • Loss of repayment options
  • Contacting your loan's endorser/co-maker/co-borrower for payment in full
  • Legal action that may result in judgments, asset seizures and property liens
  • Withdrawal of your state issued license or certification
  • Exposure to civil suit
  • Being held liable for collection costs and attorney fees

Have repayment questions, use our Help Center or contact us for assistance.