![]() ![]() A defaulted FFELP borrower immediately loses eligibility for any additional federal student aid to attend college. Loss of eligibility for additional Title IV federal student aid.Payments are applied first towards collection costs owed, then to interest accrued, and, lastly, to the loan principal. Collection costs are prorated as a portion of each payment made. These collection costs could add up to 25% more to the amount that the borrower otherwise owes for loan principal and interest. Federal regulations require that NCSEAA assess the borrower an additional amount for costs incurred in collecting the debt. All costs incurred to collect this loan debt will be charged to the defaulted borrower. NCSEAA is prohibited from requesting this default notation to be deleted from the borrower’s credit record. Once NCSEAA begins reporting the account to the nationwide consumer reporting agencies, those agencies are required to reflect the default status in the borrower’s credit history for a full 7-year period, even if the loans subsequently are paid in full. NCSEAA will report the defaulted borrower’s account on a monthly basis for up to seven years and will report each loan in the account as a separate defaulted item. NCSEAA is required by federal law to report a borrower’s default status to all nationwide consumer reporting agencies (“credit bureaus”), thereby seriously damaging the borrower’s credit rating and their ability to obtain additional consumer credit in the future. Those consequences can affect one for many years. There are many negative consequences if one defaults on student loans. ![]() Federal and state laws provide NCSEAA with special collection powers to compel the repayment of a defaulted student loan debt. (CFI) or the servicer Nelnet default, CFI or Nelnet will transfer the loans to the North Carolina State Education Assistance Authority (NCSEAA). If your loans with the lender College Foundation, Inc. For the NC Student Assist Loan Program and NC Parent Assist Loan Program, a borrower defaults if he or she has not made a monthly payment in more than 180 days. For student loans under the Federal Family Education Loan Program (FFELP) and the North Carolina EXTRA Education Loan Program, a borrower defaults if he or she has not made a payment in more than 270 days. Understanding the Consequences of Default What is default?ĭefault is the failure to repay a loan according to the terms agreed to in the loan’s promissory note. ![]()
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