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Handling Default

Consequences of Default

Administrative Wage Garnishment

If you do not voluntarily make arrangements to pay back your student loan(s), money to repay your debt could be deducted directly from your paycheck, without your consent. Federal regulations require guaranty agencies, like TG, to collect payment on a student loan debt through a deduction from a debtor's wages, known as Administrative Wage Garnishment.

You could have up to 15 percent of your disposable income* garnished, or withheld, from your paycheck each pay period to make payments on your student loan debt. If you have multiple loans held by multiple guaranty agencies or the Department of Education, you could have up to 25 percent of your disposable 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 can establish a repayment plan if an Order of Withholding from Earnings has not been issued.
  • You can request a hearing.
  • An employer may not fire you, refuse to employ you, or discipline you because your wages are garnished.

At least 30 days before the initiation of garnishment proceedings, TG will mail to your last known address a written notice that describes your student loan debt, states TG's intention to collect the debt through deductions from your wages, and provides an explanation of your rights. If you do not send your payment within the time period stated on this 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(s) 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, if you are subject to Administrative Wage Garnishment, you may not reinstate your Title IV aid eligibility.

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 TG an e-mail message.

* Disposable income is the amount of your total (gross) 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 transactions.

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Collection Costs

When you signed your promissory note, you agreed to repay the lender for your loan(s). You also agreed that if you defaulted on your loan(s), you would pay the cost of collecting on your debt. Collection costs of up to 24.34% (maximum statutory rate) may be added to the balance of your loan(s). 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 (see Collection Vendors below). Upon recalculation, the adjustment in the rate could cause an increase or decrease in 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 principal and accrued interest balance. The total amount due on any given day includes all principal, accrued interest, and the applicable percentage rate of collection costs.

Fortunately, if you set up a repayment arrangement 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 on the new arrangement, 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 TG an e-mail message.

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Collection Vendors

If you fail to establish a repayment arrangement 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 to establish a repayment arrangement.

Account Control Technology, Inc.
(866) 744-1169
Correspondence
5531 Business Park South
Bakersfield, CA 93309		 Payment Address
P.O. Box 8012
Canoga Park, CA 91303
Education Assistance Services
(888) 687-5580
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) 891-9212
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 TG an e-mail message.

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Credit Reporting

Federal regulations require TG to report certain information, such as the original default amount and current balance of each of your defaulted loans, to all nationwide consumer reporting agencies. TG is also required to report the status of your loan(s) during repayment, such as delinquent payments. Even when your loan(s) is paid in full, dismissed in bankruptcy, or consolidated, the record of your defaulted student loan (i.e., collection record) 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 the following four nationwide consumer 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(s) already been reported as a default on your credit report? You can still contact TG and establish a repayment arrangement on your loan(s). If you do, TG will report to all nationwide consumer reporting agencies that you are in a voluntary repayment schedule on your loan(s). If you continue to make voluntary payments on an accepted repayment schedule, you may qualify for TG's rehabilitation program.

After successfully completing TG's rehabilitation program, TG will request that all nationwide consumer reporting agencies remove the default status on your loan(s) from your credit report. To successfully rehabilitate your loan(s), you must make at least nine consecutive, regularly scheduled monthly payments and a lender must purchase your loan(s) from TG. TG currently has regular monthly sales to rehabilitating lenders; however, the purchase of your loan(s) for rehabilitation is at the discretion of the lender. Therefore, you may be required to continue making scheduled payments until a rehabilitating lender purchases you loan(s). Once your loan(s) has been purchased, the default status is removed from your credit report. If you are interested in more information regarding the rehabilitation program, please call TG at (800) 222-6297 or send TG an e-mail message.

Remember, if TG uses other means to obtain repayment of your loan(s), such as wage garnishment or Treasury Offset of your tax return (see Treasury Offset Program below), these payments will not appear as voluntary payments on your credit report, although they will be deducted from your balance.

If the information on your credit report appears inaccurate or you disagree with the accuracy or completeness of the information being reported to the nationwide consumer reporting agencies, 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 that 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 national consumer reporting agency directly or the 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 TG an e-mail message.

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Reinstatement of Eligibility for Federal Student Aid

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

Once your eligibility has been reinstated, you must continue to make regular payments, be granted a deferment or forbearance, or otherwise remain current throughout the repayment of your loan(s). If your loan's(s') status does not remain current, you are no longer eligible for federal student aid and cannot receive additional federal student 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 federal student aid, call TG at (800) 222-6297 or send TG an e-mail message.

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Texas Lottery

If your student loan(s) 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 TG an e-mail message.

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Texas Professional License

Renewal of your Texas state occupational/professional license (e.g., Cosmetology, Real Estate, Optometry, etc.) may be withheld if you are in default on your TG student loan(s).

You must have established a satisfactory repayment arrangement 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 TG an e-mail message.

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Texas State Bar Attorney License

Your Texas State Bar attorney license may be suspended if you default on your TG student loan(s).

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

Alternatively, you may satisfy your student loan debt by signing over to TG a portion or all of the funds held by the Texas State Comptroller 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 TG an e-mail message.

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Transcripts and Academic Records

If your TG student loan(s) 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 TG an e-mail message.

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Treasury Offset Program

Remember that income tax refund you thought you were getting this year? It could go straight to TG to repay your defaulted student loan if you have not made a satisfactory repayment arrangement. When you are eligible to receive money from the federal government, such as an income tax refund, and that money is diverted to repay your defaulted student loan(s), this is known as a Treasury offset and is required by federal regulations.

If you have made an arrangement with TG to repay your defaulted student loan(s) and subsequently you fail to make regular payments (become delinquent), you may be subject to Treasury offset. If you make payment(s) to restore a current status on your student loan(s) and continue to make timely payments, Treasury offset action will be suspended. However, if your account becomes delinquent again, Treasury offset will automatically be initiated.

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,
    • 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 subject to Treasury offset because of your federal debt, your spouse may be entitled to claim his or her return. You can contact the IRS about your Treasury offset at (800) 304-3107.

The notice you receive will explain your rights with regard to the Treasury offset process.

If tax refunds or other 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, Treasury offsets do not count toward any program that requires voluntary payments such as reinstatement or rehabilitation.

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

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