FINANCIAL AID PUBLICATIONS

STUDENT FINANCIAL AID HANDBOOK 2003– 2004

Chapter Nine

DELINQUENCY AND DEFAULT

Repayment of your student loans should be given top priority when planning your post-graduation finances. Educational loans carry the same weight as consumer loans, such as a mortgage or car loan. Failure to meet responsibilities could have a devastating effect on your credit rating, and have serious legal repercussions.

Student's Responsibilities
As outlined in the promissory notes, staying current and not being delinquent or going into default is the borrower's responsibility.

Reason for Default
· Deferments were not filed.
· Address changes were not reported.
· Loan was not repaid.
· Borrower does not respond to mail.

Preventive Measures
Student loans may be sold and resold at any time. Borrowers should be notified by their original lender/servicer(s) when this occurs. Borrowers must pay special attention to where their accounts are held to insure payments are received by the appropriate lender. A delinquency status can occur simply by mailing payments to the original lender as opposed to the new lender or servicing center that currently holds the loans.

File deferments or forbearance forms each year and keep copies for your records.

If using your parents' address, and/or another address other than your own residence, check for mail at least every two weeks.

Send all correspondence to the current lender/servicer by certified mail and always keep a copy for your records.

Stay in touch with the lender/servicer. Document your conversation and include the date, time and the name of the person you whom you spoke.

After a missed payment the lender should be in touch; but not required according to the promissory notes, payments are the borrower's responsibility.

Once your loan enters default status it is too late. You may be required to repay the entire amount immediately plus fees. Therefore, it is imperative that you keep track of your status at all times.

CONSEQUENCES OF DEFAULT
Any student delinquent or in default on any prior educational loan may not receive financial aid at UMDNJ until the delinquency or default status has been rectified. The Financial Aid Office will be able to counsel you in the resolution of such problems.

Nationwide credit bureaus will be notified.

SOIL (State Offset Income Liability) - the borrower's name will be sent to the State. State income tax refunds will be withheld.

Federal Offset Income Tax - federal refund will be withheld.

University records will be withheld.

Litigation will be initiated.

Wages will be garnished.

Liens will be placed on property and/or business.

Licenses may be suspended.

REPAYMENT OF STUDENT LOANS SHOULD BE GIVEN TOP PRIORITY WHEN PLANNING YOUR FINANCES. THEY HAVE THE SAME WEIGHT AS ANY CONSUMER LOAN SUCH AS A MORTGAGE OR CAR LOAN.