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Darton State College Financial Aid | Default Prevention

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Default Prevention

The Darton State College Default Prevention Department is dedicated to assisting borrowers who are delinquent and could possibly default on their student loans. Its mission is to inform borrowers of the consequences of default, how to avoid it, and how to get out of default. Please contact the Default Prevention Department at (229) 317-6525 for any information regarding loan repayment, delinquency, or default.

A borrower is legally required to repay student loan(s) even if he or she does not graduate, has difficulty obtaining employment after graduating, or is disappointed with the education received. A borrower becomes delinquent on a student loan after missing a payment, and enters default if he/she has not made a payment for 270 days and has failed to contact the lender about other options, such as deferment or forbearance. There are severe consequences for borrowers who default on loans.

Preventing Default

The ways a borrower can prevent default:

Postponing Repayment

A borrower can often postpone repayment of a student loan by requesting a deferment or forbearance. The borrower should contact the lender before defaulting on a loan and find out if he/she qualifies for a deferment or forbearance. Once the loan enters default status, the borrower cannot receive (and is no longer eligible) for deferments or forbearances.

While in deferment, the lender agrees that the borrower does not have to repay the principal of the loan for a certain amount of time. The interest on subsidized Stafford loans will not accumulate while the loan is in deferment because the government pays the interest on those loans. The interest will still accrue for other loans in deferment, such as the unsubsidized Stafford loan.

There are many circumstances for which a lender may consider granting a deferment. A few are listed below. The borrower should contact the lender for more information.

Deferments are usually allowed for:

A borrower has to submit an application along with supporting documentation in order to be granted a deferment. The borrower should continue making payments on his/her loan until notified that the deferment has been granted. A student who is continuing his/her studies at Darton State College must get a Verification of Enrollment form from the Registrar’s Office and send it to the lender.

If a borrower is experiencing severe economic hardship (or some other unusual situation) and is not eligible for a deferment, he/she may be eligible for forbearance. Forbearance allows a borrower to delay or reduce payment for a certain amount of time, usually 12 months at a time for up to three years. Interest still accrues during forbearance, and the borrower is responsible for paying that interest.

As with a deferment, a borrower must apply for forbearance and provide supporting documentation. The borrower should continue to make payments on the student loan(s) until notified that the forbearance has been granted.

Why should a borrower avoid defaulting on a student loan? Many students do not realize the seriousness of defaulting on a student loan. The consequences can be devastating, and can affect every area of a person’s life.

Consequences of default

Getting out of Default

A borrower who has defaulted on a student loan must contact the servicer or lender. They can work together to determine the best payment plan. The borrower regains eligibility for Title IV financial aid after making six regular on-time payments, but is not out of default until a borrower makes 9 payments, each within 20 days of the due date, within 10 consecutive months. Also, the 9 payments in 10 months standard must be incorporated in the data manager’s loan rehabilitation agreement with the borrower. After the payments are made under the agreement, the borrower is no longer in default, and the loan is considered rehabilitated. When the borrower is out of default, the default will be taken off the reports sent to the credit bureaus.

Collection Agencies

The lender may use a collection agency to collect a defaulted loan. Federal regulations state that the borrower may be held responsible for these fees, as well as the full amount of the loan. The fees vary, but according to federal regulations, the fees must be reasonable. If the borrower believes the fees are not reasonable, he/she can refer to the US Department of Education Debt Collection Service “Guide for Defaulted Borrowers.”

Responsible Department: Financial Aid
Content Contact: Haley Hooks (web representative)
Department Head: Haley Hooks
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