A few years ago, after President Obama’s administration came into office, the Department of Education took over control of all student loans. Therefore, many students defaulting on student loans may now be contacted by the government itself. The U.S. Department of Education now holds the defaulted student loan(s) for which you are responsible. Typically, when this happen, they demand that the entire outstanding balance for your loan(s) become due and payable immediately. In addition, you will encounter the costs of the Department of Education has to endure to collect on these loan(s). These charges can add substantially to the amount needed to satisfy your debt.
The Department wants you to know that paying your debt by a mutually agreeable installment plan may make your loan(s) eligible for loan rehabilitation or payoff through consolidation, which will remove your loan(s) from default status and may improve your credit rating, and will make you eligible for additional Title IV student financial assistance.
To remedy your default status, you can pay the total amount due immediately or contact the D customer service representative to enter into an acceptable Repayment Agreement or to find out additional information on the benefits of the Department’s loan “rehabilitation” and “consolidation” programs. They can be reached at the Customer Service Center toll free at 800-621-3115.
All of the Department’s repayment opportunities are designed to assist you in remedying your defaulted student loan status.
Failure on your part to repay your debt may result in the Department moving against you with one or all of the following collection measures:
• The Department will report your default status on the loan(s) to national credit reporting agencies; this in turn could hurt your ability to obtain further credit.
• The Department can refer your debt to a collection agency, and charge you the costs incurred by the Department in having that agency collect the debt(s). These costs are currently up to 25% of the principal and interest owed on your loan. The Department applies any payments you make first to these costs, and then to your loan balance. This will increase the cost to you of paying off your loan by up to 25%!
• The Department can notify your employer in order to initiate garnishment of your wages.
• The Department can refer your debt to the U.S. Attorney for litigation.
• The Department can perform computer matches with other Federal agencies to determine if you are a government employee or recipient of other Federal aid for purposes of offsetting all or a percentage of these funds.
Therefore, it is definitely in your best interest to contact the Department of Education immediately if you think you may be in default of your student loan(s).