Student Loan "Default" vs. "Delinquency" - And Why It Matters.
Federal student loans (as opposed to private student loans) go into “default” at 270 days past due, so up until 270 days past due you’re just “delinquent” on your federal student loans. Why does this matter? There are no “collection fees” that accrue when you’re merely “delinquent.” You are delinquent when you miss a payment. Collection fees will only begin to accrue once you’re in default – i.e., at 270 days past due. This is only for collection fees. “Late fees” will begin to accrue as soon as you’re delinquent – when you miss a payment. If you are in default, you’re probably worried about collection fees, as they are significantly larger than late fees. You cannot get late fees adjusted. Collection fees, on the other hand, are always negotiable and can be adjusted.
Generally, student loans are not dischargeable in bankruptcy absent a showing of undue hardship. Student loan debt is widely considered the worst kind of consumer debt, as it is the most difficult to discharge in a bankruptcy proceeding. There are alternatives for relief if you are experiencing difficulty repaying your student loans. Contact a professional to explore your options. You may contact White Law Firm, PLC at (616) 920-1932 for a free consultation.