Shoptalk 533, December 15, 2009

Policy Resources

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Q.: Is a borrower who misses a monthly loan payment, but pays a single payment amount the following month, 30 days delinquent on his or her loan? Does the clock go back to 0 days delinquent, or does the borrower need to make up all the missed payments to be current again?

A: This repayment situation is called a "rolling delinquency," which occurs whenever the delinquent status of a loan is increased or reduced but not completely eliminated as result of a payment, the reversal of a payment, a deferment or forbearance, or the receipt of a new out-of-school date.

In the example described, the borrower would have to make the equivalent of two monthly payments (the current monthly payment due and the missed payment) to resolve the delinquency. These borrowers are encouraged to contact their lender to discuss options available for resolving the rolling delinquency.

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