Default Prevention

What Is Student Loan Default?

A federal student loan goes into default when a borrower fails to make payments for 270 days or more. Defaulting on a student loan has serious consequences including damage to credit scores, wage garnishment, loss of eligibility for future federal aid, and withholding of tax refunds.

Avoiding Default

Arkansas Baptist College works proactively with students and alumni to prevent loan default. If you are having trouble making your loan payments, contact your loan servicer immediately. Several options are available:

• Income-Driven Repayment Plans: Monthly payments are based on your income and family size, making them more manageable.
• Deferment: Temporary postponement of loan payments during qualifying circumstances such as enrollment in school, unemployment, or economic hardship.
• Forbearance: Temporary reduction or suspension of payments when you are experiencing financial difficulty.
• Loan Consolidation: Combining multiple federal loans into a single loan with one monthly payment.
• Public Service Loan Forgiveness: Forgiveness of remaining loan balance after 120 qualifying payments while working in public service.

Borrower Responsibilities

• Complete entrance counseling before receiving your first loan disbursement
• Sign a Master Promissory Note (MPN) for each loan type
• Borrow only what you need to cover educational expenses
• Keep copies of all loan documents and correspondence
• Notify your loan servicer when you change your name, address, phone number, or Social Security number
• Notify your loan servicer if you transfer, withdraw, drop below half-time, or graduate
• Make payments on time, even if you do not receive a billing statement
• Continue making payments while waiting for deferment or forbearance to be processed
• Complete exit counseling when you graduate, leave school, or drop below half-time enrollment
• Understand the terms and conditions of all your loans

Know Your Loan Servicer

Your loan servicer is the company that manages billing and repayment for your federal student loans. To find your servicer, log in to studentaid.gov and view your loan details under the "My Aid" section.

Exit Counseling

Federal regulations require that all student loan borrowers complete exit counseling when they graduate, leave school, or drop below half-time enrollment. Exit counseling provides important information about your loan repayment obligations and options. Complete exit counseling at studentaid.gov/exit-counseling.

Helpful Resources

• National Student Loan Data System (NSLDS) -- View your federal loan history and find your servicer
• FSA Collections: (800) 621-3115
• FSA Ombudsman: (877) 557-2575
• Complete Exit Counseling

Forms

The following forms are available for download: