Default on a Federal Loan & Federal Aid Eligibility

Defaulting on a federal loan has serious consequences and an effect upon a student's continued financial aid eligibility.  The Student Aid Report (SAR), the output document that results from the FAFSA, would indicate if a student is in default on a federal loan and which agency should be contacted to discuss the default status.  Until such time as the default status is cleared, a student is ineligible for federal aid.  Because a default on a federal loan will be reported to the credit bureaus, a student's eligibility for other credit-based aid such as an alternative loan may be adversely affected.