A number of families have sent me this notice after receiving an email from Federal Student Aid. Most are in panic mode and others are frustrated after waiting on hold to speak with their loan servicer and never getting to speak with a real person.
If a federal student loan borrower is receiving a notice about delinquency or default while they are still enrolled in college full-time, their loans should generally be in deferment, meaning no payments are due. However, there are a few possible reasons why they might be receiving this notice:
Enrollment Status Not Updated – The borrower’s school may not have correctly reported their full-time enrollment to the National Student Loan Data System (NSLDS), which is used by loan servicers to determine deferment eligibility. If the system shows them as less than half-time or unenrolled, payments would become due.
Loan Type Not Eligible for In-School Deferment – Some loan types, such as Parent PLUS Loans, do not automatically enter deferment while the student is in school. Borrowers must request an in-school deferment for these loans.
Loan Servicer Error – Sometimes, loan servicers make mistakes in processing deferments. If the borrower believes they should be in deferment, they should contact their loan servicer immediately to correct any errors.
Previous Loans Already in Repayment – If the student took out federal student loans for a previous degree or program and was not enrolled at least half-time for a period, those loans may have entered repayment. In-school deferment usually applies only to current loans related to an ongoing degree program.
Private Loans Confusion – The notice could be related to a private student loan instead of a federal loan. Private loans have different rules and may not offer in-school deferment.
What the Borrower Should Do
Check Enrollment Status: Contact their school’s financial aid office to ensure their full-time status has been reported to the NSLDS.
Contact the Loan Servicer: Call the loan servicer (listed on the notice) and ask why the loan is being considered delinquent.
Request a Deferment: If there’s an issue, they may need to submit an In-School Deferment Request Form to their loan servicer.
Review Loan Type & Terms: Confirm whether the loan is eligible for in-school deferment.
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