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Default Prevention Management Policy

The Higher Education Authority’s (HEA) (1965) implementing regulations at 34 CFR 668.217 require that a school’s Default Prevention Management Plan help to reduce defaults and prevent the loss of institutional eligibility.
The purpose of the Default Prevention Management is to assist the students with the importance of Credit, Financial Decisions (NOT Financial Aid), Basics of Financial Budgeting—checks and balances, TIPS for Student Loan Repayments and how their repayment obligations affect Southern University at New Orleans. These key elements of debt management will help students to have more knowledge about financial planning. Teaching students about their educational debt will allow students to plan.
As a student borrower, under the Federal Direct Program, it is the student's responsibility for repaying an accepted student loan(s). A student’s financial situation is strengthened when you avoid default. The best way to avoid default is to build a relationship with your lender or servicer, especially when you cannot make payments.
The key elements of debt management are knowledge and planning. Learning about educational debt will allow the student to plan for repayment. Students should be aware of their choices by reviewing the various repayment options available below:
1. Standard—monthly payments for this plan are fixed and remain the same until the loan is paid in full. The minimum monthly payment is $50 and may be higher in order to pay off the loan in 10 years.
2. Graduated—payment plan starts with low payments that steadily increase over time and is a good alternative if you anticipate your income to rise.
3. Income-Sensitive—repayment plan is calculated from your actual earnings, starting with payments that increase or decrease as your income fluctuates
4. Extended—repayment plan is only available on or after October 7, 1998, to new borrowers who have accumulated Federal Family Education Loan Program (FFELP)/Federal Direct loans totaling more than $30,000.
Straying away from these guidelines could result in dire consequences. The same can be true if a student misses several payments. If it becomes 270 days past due, then the loan will be considered a default. Failure to repay a student’s loan may result in any or all of the following:
Adverse credit when the default status is reported to all national credit bureaus. This may affect the student’s ability to obtain financing for cars, houses, etc.
Default reported to the Internal Revenue Service, causing federal and/or state tax refunds to be withheld and applied to the loan balance
Garnishment of wages
Collection of necessary costs involved with debt collection
The loan will be assigned to a collection agency
Loss of other federal or state payments
Loss of eligibility for further assistance from any Title IV Program
Loss of eligibility for repayment options, deferments, and interest benefits as described on the Master Promissory Note
Denial of professional licenses (in some states)
Lawsuit and the liability of court-legal expenses