Consequences of Default
Lose eligibility for grants and student loans
From the date of default, the borrower is no longer eligible for any
Title IV funding which includes Pell or OTAG grants and additional
student loans.
Collection costs added up to 19%
After default, the borrower has 60 days to set up initial satisfactory
repayment arrangements with OGSLP. Failure to set up satisfactory repayment
arrangements and make a satisfactory payment within 60 days will result
in collection costs of 19% being added onto the balance of your student
loan.
Credit Report damaged
After default, the borrower has 60 days to satisfy the balance with OGSLP.
Failure to satisfy the balance within 60 days will result in adverse
credit being reported to all national consumer reporting agencies, thereby seriously
damaging you credit.
10% to 25% of net pay could be garnished
Failure to set up satisfactory repayment arrangements could result in
garnishment of your wages. Administrative Wage Garnishments allows
up to 15% of a borrower’s
wages to be garnished without attaining a judgment. A court judgment will
allow up to 25% of a borrower’s wages to be garnished.
Tax refunds applied to student loan debt
Failure to set up satisfactory repayment arrangements and make a satisfactory
payment could result in your state and federal tax refunds or other federal
payments being offset and applied to your student loan account.
Collection agencies referral
Accounts are referred to external collection agencies for further collection
efforts after approximately 6 months of non-payment.
Transcript Release
You may have been told by a school that your academic transcript will not be
released to you unless your defaulted student loan is satisfied. The academic
transcript is the property of the school, and it is the school's responsibility
to decide whether to release the transcript to you. There is no Federal law
which allows the guaranty agencies or the Department to tell the school not
to release academic transcripts. Our role is only to inform schools of the
current status of your account.
You should contact the school for additional details on the release
of your academic transcripts.