Delinquent Loans

Default in the Federal Perkins Loan Program is defined as "the failure of a borrower to make an installment payment when due or to comply with other terms of the promissory note or written agreement."

Failure to repay according to your loan's governing terms and conditions may result and is not limited to the following actions:

Late fees: A late fee will be charged each month a payment is past due. Late fees are 20% of your monthly payment amount. Partial payment will not prevent late fees from accruing.

Delinquency notification to national credit bureaus: Federal Regulations require monthly reporting of loan status. A negative report will remain on your credit history for seven years after the loan is paid in full. In the case of some bankruptcies, it could remain up to 10 years. A payment or deferment will not reverse a prior months report.

Loss of State income tax refunds: Personal Oregon State tax refunds may be sent to Linn-Benton Community College to be applied to delinquent amounts owed to the College. The Oregon Department of Revenue will deduct a 7% processing fee before each tax offset is sent.

Collection agency submission: Failure to repay your Student Loan will result in the account being submitted to a collection agency. The total loan account, in addition to collection agency fees will immediately become due. Collection fees are 30 to 50 percent of the total loan plus interest and late charges. Once an account is with a collection agency, deferments will not be granted. All inquiries must be made to the collection agency after account submission.

Legal action with additional charges: A collection agency may seek legal action on a delinquent Loan. When a collection agency sues for payment the litigation and court costs will be added to the total amount due in addition to collection agency fees.

Difficulty in obtaining credit: Federal regulations require monthly reporting of your loan status. A negative reporting may cause difficulty in obtaining credit such as home mortgages, or auto loans.

Loss of eligibility for future federal student aid: Federal regulations require defaulted Federal Perkins Loans be reported to the United States Department of Education. A delinquent loan will cause you to become ineligible for additional Title IV financial student aid. It is difficult to regain eligibility once a loan has become delinquent.

Loss of Linn-Benton Community College services: Once an account becomes 2 months past due, a hold is placed on all LBCC services. Services include, but are not limited to requests for transcripts, verification of degrees, or class registration. Holds will be released when the loan account is brought current.

Assignment to the U.S. Department of Education: Defaulted Federal Perkins Student Loans will be assigned to the U. S. Department of Education for collection. All inquiries must be made to the Department of Education. The promissary note is no longer the property of LBCC. The Federal Government will collect the Loan.

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