If You Default on Federal Loans

If a student defaults on a federal loan, Xavier, the lender or guarantee agency that holds the loan, the state, and the federal government may all take action to recover the money, including notifying national credit bureaus of the student's default. This may affect the student's credit rating.

If a student defaults on a federal loan the agency holding the loan may ask the employer to deduct payments from the borrower's paycheck. Also, the borrower may be liable for expenses incurred in collecting the loan.

If the borrower decides to return to school, the borrower is not entitled to receive any more federal student aid.

The U.S. Department of Education may ask the Internal Revenue Service to withhold the income tax refund of the borrower and apply it toward the amount owed.