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Handling Default

Consequences of Default

Administrative Wage Garnishment

If you do not volunteer to make arrangements to repay the money you owe on your student loan, money could be deducted directly from your paycheck, without your consent, to repay your loan. Federal regulations require guaranty agencies, like TG, to administer this program, which is called Administrative Wage Garnishment.

You could have up to 15 percent of your disposable income* "garnished" to recover your student loan debt. If you have multiple loans held by multiple guaranty agencies, you could have up to 25 percent of your income garnished.

By law, you have certain rights when you are facing Administrative Wage Garnishment, including:

  • You can inspect and copy records relating to your debt.
  • You may establish a repayment plan if an Order of Withholding from Earnings has not been issued.
  • You have the right to request a hearing.
  • Employers may not fire you, refuse to employ you, or discipline you because your wages are garnished.

If you do not send your payment within the time period stated on your Notice Prior to Withholding, then your wages may be withheld. Once wage garnishment has been initiated, the wage withholding order will remain in place until your employment is terminated or your loan is paid in full.

Payments withheld under Administrative Wage Garnishment will not appear as voluntary payments on your credit report although they will be deducted from your balance. In addition, borrowers who are subject to Administrative Wage Garnishment are not eligible for reinstatement of Title IV eligibility or FFELP consolidation.

If you have been notified that TG is planning to garnish your wages and you want to find out more about your rights or how to avoid having your wages withheld, call (800) 222-6297 or send us an e-mail message.

* Disposable income is the amount of your total salary minus any deductions required by law — such as state and/or federal income tax, child support, and mandatory retirement deductions. In the state of Texas, your employer may also charge an administrative fee of up to $10 for processing these checks.

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Collection Costs

When you signed your promissory note, you agreed to pay your loan back to the lender. You also agreed that if you defaulted on this agreement, you would pay collection costs. Collection costs of up to 24.34% (maximum statutory rate) may be added to the balance of your loan. Collection cost rates are recalculated annually and the percentage rate is subject to change due to factors such as a change in administrative costs or whether your account is assigned to a collection agency or attorney. Upon recalculation, the adjustment in the rate could cause an increase or decrease to the total balance due on your account.

The total balance due on your account changes daily as simple interest accrues. Collection costs are calculated as a percentage of the total principle and accrued interest balance. The total amount due on any given day includes all principle, accrued interest, and the applicable percentage rate of collection costs.

Fortunately, if you set up a repayment plan and make your first payment within the first 60 days of the default claim payment date, collection costs will not be added to your account as long as your account remains current. If your account ever becomes 60 days past due, collection costs will be assessed at that time and will remain on your account until it is paid in full.

For more information on collection costs, call TG at (800) 222-6297 or send us an e-mail message.

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Collection Vendors

If you fail to establish a repayment agreement with TG, TG may refer your account to a collection vendor for additional collection efforts. If your account has been referred to one of the following vendors, you will need to contact that agency for repayment arrangements.

Account Control Technology, Inc.
(888) 830-7770
Correspondence
5531 Business Park South
Bakersfield, CA 93309		 Payment Address
P.O. Box 8012
Canoga Park, CA 91303
Education Assistance Services
(800) 530-6016
P.O. Box 6714
Round Rock, TX 78683-6714
Enterprise Recovery Systems
(800) 377-1904
Correspondence
2400 S. Wolf Road
Suite 200
Westchester, IL 60154		 Payment Address
ERS
ATTN: TG
P.O. Box 8030
Westchester, IL 60154
General Revenue Corp.
(800) 436-5285
Correspondence
11501 Northlake Dr.
Cincinnati, OH 45249		 Payment Address
P.O. Box 9534
Cincinnati, OH 45242
Progressive Financial Services
(800) 761-7045
1919 W. Fairmont Dr., Bldg. 8
Tempe, AZ 85282
Regional Adjustment Bureau
(800) 668-5715
7000 Goodlett Farms Parkway
Cordova, TN 38016
Van Ru Credit Corporation
(877) 468-2678
Correspondence
1350 E. Touhy Ave., Ste. 300E
Des Plaines, IL 60018		 Payment Address
P.O. Box 206
Parkridge, IL 60068
Windham Professionals
(877) 768-9028
P.O. Box 1697
Salem, NH 03079

For more information on collection vendors, call TG at (800) 222-6297 or send us an e-mail message.

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Credit Reporting

Federal regulations require TG to report certain information to the credit bureau agencies, such as the original default amount and current balance of each of your defaulted loans. TG is also required to report the status of your loans during repayment, such as delinquent payments. Even when those loans are paid in full, dismissed in bankruptcy, or consolidated, the defaulted student loan will continue to show up on your credit report for seven years from the date of delinquency which led to the default.

TG reports credit information to four national credit reporting agencies:

Equifax Credit Information Services
CSC Credit Services
P.O. Box 619054
Dallas, TX 75261-9054
Phone: (800) 759-5979

Transunion
Transunion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000
Phone: (800) 916-8800

Experian
701 Experian Parkway
P.O. Box 2104
Allen, TX 75013-2104
Phone: (888) 397-3742

Innovis Data Solutions
Innovis: Consumer Assistance
P.O. Box 1534
Columbus, OH 43216-1534
Phone: (800) 540-2505

Has your loan already been reported as a default on your credit report? You can still contact TG and set up repayment on your loan. If you do, TG will report to the credit bureaus that you are in a voluntary repayment schedule on your loan. If you can continue to make voluntary payments on an accepted repayment schedule, you may qualify for one of our programs such as rehabilitation or consolidation.

Rehabilitation will remove your account from being reported by TG as a default to the credit bureau. Rehabilitation requires you to make at least nine consecutive regularly scheduled monthly payments to qualify. Due to current market conditions in the student loan industry, specifically loss of all participating lenders, TG has suspended its rehabilitation program effective April 17, 2008. We are hopeful that this situation is temporary and that the program may be resumed in the near future. If you are interested in more information regarding the rehabilitation program, please call TG at (800) 222-6297.

Another option to consider is consolidation. If you choose to consolidate your loans, your credit report will be amended to show as a paid account. But remember, if TG uses other means to encourage you to repay your loan, such as wage garnishment of your paycheck and/or Treasury Offset of your tax return, these payments will not appear as voluntary on your credit report although they will be deducted from your balance.

If the information is inaccurate or you disagree with the validity of the information being reported to the credit bureaus, please contact TG for clarification. TG representatives will answer your questions or send you information to assist you in addressing your concerns about your credit report.

You can also complete and return a copy of the TG Credit Bureau Dispute Form. Please note this form is for TG defaulted student loans only. If you are disputing any other non-TG accounts or other items on your credit report, you will need to contact either the credit reporting agency or financial institution that is reporting the information to resolve your dispute.

For more information on credit reporting, call TG at (800) 222-6297 or send us an e-mail message.

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Receiving Additional Student Loans (i.e. Title IV Aid)

If you default on your TG student loan you must establish repayment and make six consecutive, on-time, full, voluntary monthly payments to each holder of a defaulted loan before you are eligible for additional student loans. Upon request, TG will reinstate your eligibility for a student loan and send appropriate notification to your school.

Once your eligibility has been reinstated, you must remain current throughout the repayment of your loan. If you do not remain current, you are no longer eligible for Title IV aid until your defaulted loans are paid in full.

For more information on how to set up repayment and/or request reinstatement of your eligibility to receive financial aid, call TG at (800) 222-6297 or send us an e-mail message.

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Texas Lottery

If your student loan is in default the Texas Lottery Commission is required to withhold your winnings to satisfy your TG student loan debt.

For more information, call TG at (800) 222-6297 or send us an e-mail message.

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Texas Professional License

Renewal of your professional license (i.e., Cosmetology, Real Estate, Optometry, etc.) may be withheld if you are in default on your TG student loan.

You must have established a repayment agreement with TG and be current in your payments before a license release letter will be sent to the licensing agency.

For more information on how to set up repayment and/or request a License Release letter, call TG at (800) 222-6297 or send us an e-mail message.

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Texas State Bar License

Your State Bar license may be suspended if you default on your TG student loan.

You must have established a repayment agreement with TG and be current in your payments before a license release letter will be sent to you.

It is your responsibility to forward the State Bar License Release letter to:

State Bar of Texas
Membership Department
P.O. Box 12487
Austin, TX 78711

For more information on how to set up repayment and/or request a State Bar License Release letter, call TG at (800) 222-6297 or send us an e-mail message.

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Texas State Comptroller

Reimbursements (warrants) from the Texas State Comptroller may be withheld once your TG student loan has defaulted.

You must have established a repayment agreement with TG and be current in your payments before a warrant release will be issued to the Texas State Comptroller.

Or,

To bring the account current, you may sign over a portion or all of the funds on hold to TG using the Texas Power of Attorney form located on the back of your notification letter from the Texas State Comptroller. Additional warrants to the Texas State Comptroller can be released by request as long as your account remains in a current status.

The Texas Power of Attorney form must be completed, certified, and mailed to:

TG
P.O. Box 83100
Round Rock, TX 78683-3100

For more information on repayment and/or to request a Warrant Release letter, call TG at (800) 222-6297 or send us an e-mail message.

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Transcripts and Academic Records

If your TG student loan is in default, your school may not release certain academic records (i.e., enrollment/attendance records, academic transcripts, certificates, degrees, etc.) Your account must be current before TG will issue a transcript release letter.

Each school has an individual policy for releasing certain academic records. Some schools may require additional documentation or verification of your current repayment status before releasing records or transcripts.

For more information on how to set up repayment and/or request a Transcript Release letter, call TG at (800) 222-6297 or send us an e-mail message.

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Treasury Offset Program

If you default on your TG student loan and do not make arrangements to pay it back, federal regulations require that any federal payments for which you are eligible, such as income tax refunds, be applied directly to your debt instead of being sent to you. This is called the Treasury Offset Program.

If you become delinquent on your student loan, you may be certified for treasury offset. If you bring your account current and continue to make timely payments, you will be inactivated from treasury offset. However, if your account becomes delinquent again, you will automatically be reactivated for the Treasury Offset Program.

Here's a good example: Remember that income tax refund you thought you were getting this year? It could go straight to TG to repay your student loan.

By federal law, you have certain rights when you are facing Treasury offset:

  • You must be notified that TG is proposing to use Treasury offset to collect money from you. A notice will be sent to the address you used when filing your most recent federal income tax return.
  • You must be given an opportunity to:
    • Avoid offset by arranging to repay your loan,
    • Review any records about your loan, and
    • Show why the loan is not in default or why you aren't legally responsible for repaying it.
    • If your spouse's tax refund was offset because of your federal debt, your spouse may be entitled to claim his/her return. You can contact the IRS about your federal offset at (800) 304-3107.

The notice you receive will help you take advantage of your rights.

If tax refunds or federal payments are withheld, they will not appear as voluntary payments on your credit report although they will be deducted from your balance. In addition, offsets do not count toward any program that requires voluntary payments such as reinstatement or a FFELP consolidation.

Borrowers receiving a letter from TG warning of possible Treasury offset should call TG at (800) 222-6297 or send us an e-mail message.

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