Federal Perkins Loan Default
Default is defined as failure to repay a loan according to the terms
agreed to when you signed a promissory note. If you are on a monthly
repayment schedule, Perkins Loan default occurs when you fail to make a
payment for 270 days. If your payments are due less frequently, Perkins
Loan default occurs when you fail to make a payment 330 days.
The consequences of default are severe and can be long term.
- Your school may take action to recover the money, including
notifying national credit bureaus of your default. This affects your
credit rating for a long time.
- The school can turn the loan over to the federal government for
- The Internal Revenue Service can withhold your U.S. individual
income tax refund and apply it to the amount you owe.
- Your employer might be asked to deduct payments from your
paycheck., i.e., garnish your wages.
- You may have to pay for expenses that your school incurs up
while trying to collect money from you.
- If you return to school, you’re not entitled to receive
additional federal student aid.
- Legal action also might be taken against you.
Follow these steps to avoid a Perkins Loan default:
- Plan your finances carefully; this is a serious responsibility.
- Communicate with your school as soon as you believe that you may
experience difficulty paying. Most schools are very eager to help their
students find a way to meet their financial obligation.
- Seek a forbearance or deferment, if you qualify.
Reversing a Perkins Loan Default
If you do end up in a Perkins Loan default, review our page on
Perkins Loan Rehabilitation to get good advice on how to reverse the