A list of commonly asked questions from our student loan borrowers regarding student loan default

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Frequently Asked Questions

We've compiled a list of commonly asked questions from our student loan borrowers regarding student loan default.
For issues concerning bankruptcy, closed schools, death, disability, false certification, forgery, and teacher and military cancellation, please see Loan Cancellation and Discharge.

Balance Disputes
Collection Agencies
Default Status
Incarceration
Infancy
Ownership of Loan
Never Contacted
School Complaints
Statute of Limitations
Transcript Release
Unable to Pay


Balance Disputes


If you claim to have repaid a portion of the loan which is not reflected in your current balance, or to have repaid the loan in full, you should send copies of the canceled payment instruments (i.e. checks, money orders, etc.) used toward repayment of the loan and any other pertinent information to the agency servicing your loan.

Collection Agencies


This information is provided only for student loan borrowers with loans held by the U.S. Department of Education (Department). If your loan is held by a guaranty agency, please see Contacting Us for repayment information.

The Department currently contracts with several collection agencies to administer many of the collection activities of our accounts. Only those accounts which fail to establish and adhere to a repayment arrangement are subject to assignment to a collection agency by the Department's Default Resolution Group. Those accounts assigned to a collection agency are assessed additional collection costs.

Collection agency employees are trained to comply with the terms of the Fair Debt Collection Practices Act which governs collection practices by debt collectors. When the Default Resolution Group is notified in writing of complaints concerning our collection agencies, we review the evidence and take the necessary action to correct the situation.

You may contact the collection agency which your account may have been assigned to at the address or phone number below for questions concerning loan repayment and loan consolidation, to change your mailing address, or for balance information. If you do not know which collection agency your account may have been assigned to, you may contact the Default Resolution Group for the agency's address and telephone number.

Default Status


If you're claiming that your loan was not in default, and therefore, should not have been assigned to a guaranty agency or the Department, you must provide us with evidence that your loan should not be in default status. In most cases the loan was declared in default by some organization other than the guaranty agency or the Department. For National Direct Student Loans (NDSL)/Perkins Loans, you must contact the school, and, if the school determines the loan was not in default, the school may request that we return the loan to the school. For Federal Family Education Loan (FFEL) loans, the guaranty agency that paid the insurance claim on the loan determined that the loan was in default, so you must contact the agency and demonstrate that the loan was not properly placed in default.

If the organization which declared the loan in default is now closed, you must provide specific evidence that you took timely and appropriate actions, such as notifying the lender, submitting appropriate forms for deferment, and that the organization defaulted the loan in error.

Incarceration


Borrowers who are incarcerated should request an "Incarceration Verification" form from the agency servicing your loan. This form should be completed by the Warden or other appropriate official of the institution where the borrower is incarcerated. This form should be returned to the servicing agency.

Infancy


The defense of infancy is an argument that the signing of a contract by a minor would not create a binding obligation. The defense of infancy is no longer a valid defense against collection of a student loan by virtue of Section 484A(b)(2) of the Higher Education Act of 1965 (20 U.S.C. 1091a(b)(2)).

Ownership of Loan


This section will provide you with information on resolving a dispute if you are claiming that your name and/or social security number (SSN) is associated with a student loan that you did not receive.

If you claim that both your name and SSN is incorrectly associated with a student loan account, you should request a copy of the promissory note from your loan holder before possibly alleging forgery.
If you claim that only your SSN is incorrectly associated with a student loan account, but not your name, mail or fax copies of the following documents to your loan holder:
1. SSN card;

2. birth certificate; and

3. either your driver's license, state identification card, U.S. passport, military identification or INS 551.

If it is determined that your SSN was erroneously assigned to a student loan account, your SSN will be deleted from our database.

If you claim that your name, and perhaps your address, is associated with a student loan account, but the SSN is different, it may very well be that the wrong person has been contacted because of the similarity with your name. You should contact your loan holder.
Never Contacted


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, and you are obligated to make payments even if you do not receive any notice from the holder of the loan. If you have not received any billing statements from us, you may not have properly notified the servicing agency of your current address.

School Complaints


Borrowers frequently raise as defenses or objections to repayment of student loans complaints that they have about the quality of the educational services or other acts or omissions by the school they attended. Most of the loans collected by the Department were made by banks or other financial institutions, and the borrower's loan contract with that lender is separate and distinct from the borrower's enrollment agreement with the school. Failure by the school to deliver services under the enrollment contract may well give the student a claim against the school, but generally that claim against the school does not excuse you from honoring your separate loan contract with the lender. Students bear responsibility for examining before they enroll whether a school offers training that meets their academic and vocational needs. Borrowers who have claims against schools should raise those claims against the school directly or through State consumer protection licensing authorities.

In some instances the Department treats complaints against a school as valid grounds for reducing or cancelling your obligation to repay a student loan. For example, the Department can reduce the loan liability for borrowers who prove they withdrew from enrollment, and were therefore owed, but did not receive, a refund of tuition and fees.

Statute of Limitations


By virtue of section 484A(a) of the Higher Education Act, statute of limitations of no kind now limits Department’s or the guaranty agency's ability to file suit, enforce judgments, initiate offsets, or other actions, to collect a defaulted student loan. Regardless of the age of the debt, statutes of limitation are no longer valid defenses against repayment of a student loan.

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 agency 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.

Unable to Pay


If you are unable to afford to make payments toward your defaulted loan, you should complete and return a "Statement of Financial Status" along with evidence of your current financial situation, which evidences your inability to pay (i.e. paycheck stub, copies of billing statements) to the servicing agency or the collection agency servicing your account. Based on the information provided, a payment plan which is both acceptable to the agency, and affordable to you, will be established.