What is Student Loan Default?
Student loan default is considered to have taken place under Section 435(i)Title IV of the Higher Education Act after default has continued for 270 days. During the delinquency period, the lender must exercise ‘due diligence’ which means that they need to make an effort to contact the borrower with regard to repayment. Should efforts fail, the loan could be passed on to a quaranty agency. This could mean that the entire balance becomes payable. Student loan forbearance and loan deferment are no longer possible once defaulted on. Student Loan Default Rates Rise Dramatically Figures released by the U.S. Department of Education have revealed a sharp rise in student loan default rates. A total of 6.9% of loans have been defaulted on during fiscal year 2007; this figure was just 4.6% just two years earlier. This is the highest figure since 1998. Figures are similar for the private market for student loans as 3.4% of student loans were written off by SLM Corp in 2008. The Consequences of Stu
