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Frequently Asked Questions - Defaulted FFEL Loans



Questions
What is default and how does it affect me?
How do I review my HESC account and/or make payments electronically?
Can I make payments on my defaulted FFEL loan using automatic withdrawal?
How do I have my loan removed from default status and regain eligibility for student financial aid?
What if I am having difficulty making my monthly payments?
If I receive a notice that my wages will be garnished, what must I do to avoid the garnishment?
If my payments are being withheld from my salary due to wage garnishment by HESC, is there anything I can do to stop it?
Why is the balance higher than what I thought I owed?

What is default and how does it affect me?

Default occurs when the owner of your FFEL loan files for reimbursement with the guarantor of your loan because you have not paid your loan. Essentially, your lender asks the guarantor to reimburse them because they were not able to collect from you. You are then obligated to pay immediately the entire principal balance, interest, and any collection fees added to your loan.

Default has serious consequences and can be very damaging to your credit rating.
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How do I review my HESC account and/or make payments electronically?

You can review your account or make your payments by credit card on the Web by clicking Manage My Account at the bottom of any page.
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Can I make payments on my defaulted FFEL loan using automatic withdrawal?

You can authorize HESC to electronically debit your checking account for the monthly payment due on your student loan debt by enrolling in HESC's SmartCheck program. Visit the SmartCheck page to begin the process. Click the Contact HESC link below to reach a HESC representative.
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How do I have my FFEL loan removed from default status and regain eligibility for student financial aid?

Your loan is removed from default, and credit reporting agencies are notified, when your loan is paid in full. If you cannot pay the balance in full, you may be eligible for consolidation.
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What if I am having difficulty making my monthly payments on my defaulted FFEL loan?

If you can’t afford to make your monthly payments, contact us right away. Obtain contact information by clicking Contact HESC below. Be sure to include your account number in your message. You may be eligible for consolidation or a temporary Reasonable and Affordable Repayment Arrangement.

If payments are not made, the default becomes even more serious. Federal law provides HESC with many tools to collect on defaulted loans, such as wage garnishment and seizure of your tax refunds.
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If I receive a notice that my wages will be garnished, what must I do to avoid the garnishment?

Wage garnishment action may be avoided by immediately contacting Default Collection (1-866-991-4372) to make acceptable repayment arrangements. Only by making an acceptable repayment arrangement and paying every month as agreed will you prevent your account from proceeding to wage garnishment.
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If my payments are being withheld from my salary due to wage garnishment by HESC, is there anything I can do to stop it?

Contact Default Collections (1-866-991-4372) to discuss your account. Generally, a substantial commitment on your part is necessary in order for HESC to consider withdrawing a wage garnishment order. If your circumstances involve financial hardship, contact HESC to discuss possible alternatives.
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Why is the balance higher than what I thought I owed?

When a loan is placed in default, the costs of collecting your loan are added to the amount owed. This fee is currently 15.25 percent. In addition, the interest on your loan continues to accrue. Your payments are applied to the collection costs, then to interest on the loan, and only then to the principal on the loan.
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