Avoid Defaulting Your Direct Consolidation Loan

 

Direct Loan Consolidation offers borrowers an excellent opportunity to consolidate their existing loans and make one single payment every month. This is very convenient and stress free option that even offers flexible payment plans, renewed deferment and reduced monthly instalments.

After consolidating your loan with direct or Private Loan Consolidation, it is essential to ensure that you do not default on monthly payments. Those who default and do not pay their instalments on time are referred to as delinquent and if payments are not made for a prolonged period of 270 days, they are said to default. Defaulting on a loan has a severely negative impact and consequences that the borrower will be saddled with for life.

Those who default face –

A demand from the Education Department to repay the loan amount in full immediately

Education Department will start the process of forcing you to repay your direct consolidation loan amount instantly and will also charge collection cost

The fact that you have defaulted will be immediately notified to the credit bureaus and this will damage your credit rating making it impossible to opt for other loans and credits such as credit cards, auto loans and mortgages.

Defaulted borrowers cannot opt for the student aid under Title IV.

There are possibilities that your Federal Income Tax Funds are withheld and your wages garnished.

As a borrower of the consolidation loan, it is highly recommended to always stay in touch with the direct loans servicing centre and keep them up to date on any name changes, address changes and other aspects that may cause your bill to get lost.

When you have trouble with making your monthly payments on time, it is in your interest as a borrower to keep the servicing centre informed. The centre will offer you alternatives such as changing repayment plans and applying for forbearance or deferment on your direct loan consolidation.