Consequences of Default


Your defaulted student loans will be reported to all consumer reporting agencies.

Federal regulations require that MGSLP report student loan information to the credit reporting agencies. MGSLP will report your account status, original default amount, and current balance due. Unless you rehabilitate your student loan account, your account’s default will stay on your credit report for seven years even if you pay in full or consolidate your account. If your wages are being garnished, or your tax refund is taken due to Treasury Offset these payments will not be reported on your credit report as individual payments. Your balance due will be updated to reflect your current amount due. 

MGSLP Reports to the following agencies:

Innovis Data Solutions
Innovis: Customer Assistance
P.O. BOX 1534
Columbus OH 43216-1534
Phone: (800) 540-2505 

TransUnion Consumer Solutions
P.O. Box 2000
Chester PA 19022-200
Phone: (800) 916-8800

Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
Phone: (888) 202-4025

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

If your loan has already defaulted, please contact MGSLP to discuss your options for rehabilitation. Completing loan rehabilitation allows MGSLP to delete our reporting, and helps you clear up your credit report. If you would like to discuss your options to rehabilitate please contact our office at 1-800-322-3086 or email us.

If you feel the information MGSLP has reported to the credit bureaus is incorrect please contact us at the above number, and our representatives will advise you of your options. 

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You may have collection costs of up to 24% assessed on the defaulted student loan

When you default on a student loan collection fees are assessed. The terms for collection costs were listed on your promissory note. Collection costs are based on your loan’s unpaid principal and interest. If you would like to request a copy of your promissory note please contact our office at 1-800-322-3086 or email us.

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Wages may be garnished through administrative withholding orders

If you do not set up voluntary monthly payments on your student loans, MGSLP may issue an order to your employer requiring them to withhold fifteen percent of your wages from your paycheck and remit it to us to pay your debt. If you have more than one garnishment in place your wages may be garnished at up to twenty five percent of your income. MGSLP uses the Administrative Wage Garnishment (AWG) process, and is not required to appear in court and file a judgment in order to obtain a garnishment order. This is a federal process, so even if you live in a state that does not typically allow wage garnishments, this order will preempt state law. In some states an employer is allowed to charge an administrative fee for garnishing your wages. 

If your wages are currently being garnished, you have options available to you. You can request copies of your loan documents, and you may request a hearing regarding the garnishment of your wages. If a garnishment order has already been issued to your employer, requesting a hearing will not prevent your wages from being garnished while the hearing is held. You also have the option to set up voluntary payments instead of having your wages garnished. If you are currently being garnished, or you have received a letter stating the MGSLP intends to garnish your wages please contact our office to discuss your options. Call us at 1-800-322-3086 or email us.

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Federal and state tax refunds may be seized and applied to the loan debt

If you are not making voluntary payments on your student loan account federal law could require that any Treasury payments that you are eligible for such, as federal income tax refunds, be applied to your student loan debt rather than be sent to you. Payments obtained from the Treasury Department will be applied to the unpaid principal and interest of your loan, but do not qualify for the purpose of loan rehabilitation or for Title IV eligibility. If you have received a notice the MGSLP intends to certify your account for federal offset, please contact our office at 1-800-322-3086 or email us.
You may contact the Internal Revenue Service (IRS) at 1-800-829-1040. 
You may contact the Treasury Offset Call Center at 1-800-304-3107. 

MGSLP also has the authority to take funds issued to you by the State of Montana. If you have received a notice from the Montana Department of Revenue regarding state funds, please contact us at the telephone number listed above. 

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Your account may be assigned to a collection agency 

If you do not set up a voluntary repayment plan with MGSLP, we may assign your account to a third party collection agency. If you account has been referred to a collection agency, you will need to contact them to discuss your account. 

Performant Recovery, Inc.  (formerly DCS) 
P.O. Box 9057
Pleasanton, CA 94566-9057

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You will be ineligible for Title IV federal financial aid

If you are in default and wish to apply for any additional Title IV funding, such as Pell Grants, or additional student loans you must set up satisfactory repayment arrangements with MGSLP. You must make on time voluntary monthly payments for six consecutive months. Payments received more than 20 days past your due date will be applied toward your balance, but do not count as an eligible payment for regaining financial aid. Once you have regained eligibility, you must continue to make monthly payments on your account. If you would like to discuss your options for regaining eligibility for financial aid, please call us at 1-800-322-3086 or email us.

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Certified transcripts may be withheld

In some instances, schools may withhold academic transcripts if the student’s loans are in default. Schools may also refuse to release your transcript if you received grants that need to be repaid to the school. Registration into any other school may be denied until satisfactory repayment arrangements have been made. If you need to discuss your options for having your transcript released by your school, please call us at 1-800-322-3086 or email us.

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