How to Write a Summary on Defaulting Financial Aid Loans

Student loan default occurs when a borrower fails to make payments on a student loan as laid out in the loan agreement. The circumstances that lead to default, the process of getting out of default and the consequences of default can vary depending on the lender and the borrower's situation. Therefore, summarizing student loan default can be a helpful way to understand it better.

Instructions

1

Research financial aid default through a variety of sources. The federal government has a helpful website about financial aid loan default, and you might also be able to find information on the websites of private lenders or by interviewing people who work in the student loan field.

2

Outline your research under broad headings that seem to encompass the whole topic. For example, you might have statistics, definitions, causes, effects, solutions and tips for avoiding default.

3

Write an introduction that explains to the reader what default is and why it is significant. You could include statistics about what percentage of student loans go into default and statistics about how much the average borrower owes.

4

Explain what causes a loan to go into default. For example, a federal student loan is in default if the borrower fails to make payments for 270 days.

5

Write a section that outlines what happens when a loan goes into default. The lender will contact the borrower to try to set up a voluntary repayment plan, but if it is not successful, the lender can take other action. Possibilities include garnishing part of the borrower's paycheck, offsetting tax refunds and suing the borrower.

6

Write about the indirect impacts on the borrower. These include negative marks on the credit report, which limits the borrower's ability to get other types of loans, ineligibility for getting financial aid in the future and the stress and hassle of dealing with collection efforts.

7

Explain the ways in which borrowers can get their loans out of default. Lenders will generally work with borrowers to set up a reasonable payment plan, consolidate the loan or pay it off on a credit card.

8

Provide tips to teach readers how to avoid defaulting on their loans. For example, limiting the amount borrowed initially will help keep payments lower. Choosing an extended repayment plan or income-based repayment plan can lower payments, as well. Applying for deferment or forbearance during times of financial hardship can result in lenders allowing borrowers to skip payments without penalties.