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Failure to Pay

Federal Perkins loan

Your payments and those of other borrowers are the primary source of loan funds for current students. Failure to make your payments could jeopardize the University of Minnesota’s eligibility for loan funds to support current and future students. To protect the fund the University implements aggressive collection efforts, including the use of collection agencies, litigation, revenue refund recapture, and credit bureaus. Your student loan repayment is required even if you:

  • are dissatisfied with the education you received;
  • did not complete your program;
  • cannot get a job in your field.


Late Charges

Under the terms of the Federal Perkins Loan promissory note, the school will assess a charge, if a payment is not received when due or "timely" evidence of entitlement to deferment is not filed. Late charges may not exceed 20% of the monthly payment. In order to avoid late charges as specified in the note, payments, or forms for deferment in lieu of such payments, must reach the school on or before the due date.


If you fail to make a scheduled payment when due or to submit proper documentation of deferment, cancellation or forbearance, the school may declare your loan in default and accelerate your loan. The school will disclose to all 3 national credit bureaus that the loan is in default. If you default on repayment of your loan, you will lose the right to apply for forbearance and cancellation benefits. You will also lose the right to be awarded further federal student financial assistance until satisfactory arrangements have been made to repay the loan.

Collection Agents, Litigation and Withholding of Services

If you fail to make a scheduled payment, or fail to comply with any other terms of your promissory note, the Institution may:

  1. refer your loans to a collection agent for further collection efforts;
  2. initiate legal proceedings against you, including possible offset of Minnesota state income tax refunds;
  3. withhold institution services, such as registration, transcripts, letters of recommendation, and degree;
  4. obtain your address from the Internal Revenue Service, if the Institution has no current address for you.


In the case of a dispute over the loan terms, you may seek resolution by going to the OSFA Ombudsman’s Office at the U. S. Department of Education Web site or contact them by calling 1-877-557-2575, faxing to 202-275-0549, or writing:

U.S. Department of Education
FSA Ombudsman
830 First St NE, Fourth Floor 
Washington, DC 20202-5144