The above paragraph suggests that a 6 month period without payment puts any student loan in the category of “defaulted student loans.” Suppose that one of those 6 months is February. The student’s loan goes into default if the payment is not made within a period of 180 days. Â
Suppose that a student normally makes his or her loan payments every other month. In that case, how long a period of nonpayment must pass before that loan would be in default?
When payments are made every other month, then failure of a student borrower to pay for 240 days would put the student’s loan in the file with the defaulted student loans.
If a student cannot make the needed payments, and if his or her loan is labeled as one of the many defaulted student loans, that student does not need to fear an army of federal agents on his or her trail.
The lender of the loan must first use “due diligence.” The lender must seek to contact the borrower.
Once the lender has contacted the borrower, then the lender will determine how to proceed. If the borrower does not appear willing to arrive at a new payment schedule, then the borrower usually gives the loan to either a guaranty agency or to the U.S. Department of Education.
Once the loan has been given to a guaranty agency, then the lender has the right to demand a lump payment on the loan.
