Defaulting on a Loan
What is default?
Default occurs when a borrower becomes past due in making a payment on his or her loans. Maintaining a good credit history is an important responsibility of any borrower and you must develop a habit of meeting your payment schedule.
How will I know if I’m in danger of defaulting?
When you miss 1 payment, ECSI will send you a late payment notice with your next monthly bill and you will receive a phone call from the University. When you miss 2 payments ECSI will send a final demand notice and you will receive a phone call from the University. When you miss 3 payments, both ECSI and the University will attempt to reach you by phone. Your name will also be submitted to the State Attorney General’s Office and the US Department of Education. Both will contact you demanding final payment. When you miss 4 payments, you will receive a phone call and a letter from NC State University. When you miss 5 payments, you will receive a letter from ECSI to inform you that your account will be accelerated and you will be sent to collections if you do not bring your account current within 30 days. If you miss 6 payments, your account will then be referred to an outside collection agency and you will lose all the benefits and rights of your loan.
Remember, you must make payments on your loan even if you do not receive a bill or repayment notice. Billing statements are sent to you as a convenience, but you are obligated to make payments even if you do not receive any reminders. You may not receive a notice if your address or name has changed. You must keep ECSI and NC State University informed of any changes in your name, address and phone number.
If facing a large amount of debt, you might be tempted to skip or delay some of your student loan payments. Your Federal Perkins loan has been reported to a national credit bureau and is treated like any other form of credit. Remember, a poor credit report will negatively affect your financial reputation for many years; it could keep you from obtaining a car, a mortgage, or even a credit card. Your report could be requested and used as a basis for hiring by your employers, or it could even be used by property, casualty and life insurance companies as a basis for refusing to underwrite your personal property. Therefore, it is most important to do all you can to make your loan payments in a timely manner.
Don’t let this happen to you!
If you fail to make loan payments on time or if you default on your loan, the consequences are serious:
- You will no longer be able to make easy monthly payments.
- You will lose your deferment, cancellation, and forbearance options.
- You will not be eligible for further federal or institutional student financial aid.
- Your school academic transcripts will be withheld.
- Your loan may be turned over to a collection agency.
- Your loan will be reported as delinquent to credit bureaus, damaging your credit rating.
- Your total debt may be increased by late fees, additional interest, collections fees, court costs, attorney’s fees and other costs.
Remember, if you are having trouble making your payments, contact ECSI or NC State University! There are options that may be available in circumstances of financial hardship. We want to work with you to help you meet your loan obligation.