Office of Student Financial Assistance

Indiana University | Bloomington

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Money management: loan default

Implications of loan default

If you don't pay back a loan according to the terms in your promissory note, you may be in default. Default occurs when you fail to make a payment on your loan when due or fail to comply with other terms of your promissory note. If you default on any federal student loan, the federal government may take some serious actions against you. You might:

  • lose wages and tax refunds (both of which may be withheld and applied towards your unpaid loans)
  • lose eligibility for additional future student aid
  • be unable to get loans from any other source for purchases like a home or car
  • lose job opportunities, or be unable to obtain a professional license
  • have your defaulted loan reported to national credit bureaus, and your credit rating may be damaged
Indiana University FFELP/DL Default Rates
Campus FY Being Reported # Entering Repayment # In Default Default Rate
Bloomington 1992 4,650 159 3.4%
  1993 4,460 148 3.3%
 1994 4,367 139 3.2%
 1995 4,556 217 4.8%
 1996 5,417 286 5.3%
 1997 5,710 302 5.3%
 1998 5,509 242 4.3%
 1999 5,657 254 4.4%
 2000 5,890 284 4.8%
 2001 5,578 219 3.9%
 2002 5,307 174 3.2%
 2003 5,657 139 2.4%
 2004 6,122 144 2.3%
  2005 9,311 153 1.6%
  2006 10,045 182 1.8%
  2007 6,897 153 2.2%
Bloomington Average Default Rate FY 1992-2007       3.4%
Source: US Dept of Education National Student Loan Data System