How Defaulting on a Federal Loan Can Lock You Out of Other Federal Programs: CAIVRS
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Few people anticipate the problems that arise from defaulting on a federal loan. Sure, there’s the obvious hit to credit reports, and the possibility of judgements or wage garnishments (involuntary payments taken directly from a paycheck to repay debts.) But did you know that defaulting on a federal loan can render you ineligible for many other types of unrelated, federally-backed loans?
There’s a word – or an acronym, more accurately – that helps to make this all possible: CAIVRS.
CAIVRS stands for Credit Alert Interactive Verification Reporting System. It’s a federal database that tracks people who owe money to the government. This includes people who have defaulted on student loans, home loans, or other federal debts.
The database is maintained by the Federal Financial Management Service (FMS), which is part of the U.S. Department of the Treasury. CAIVRS contains information on people who have defaulted on loans from the following federal agencies:
Department of Housing and Urban Development (HUD)
Department of Veterans Affairs (VA)
Department of Education (ED)
Department of Agriculture (USDA)
Small Business Administration (SBA)
Federal Deposit Insurance Corporation (FDIC)
Department of Justice (DOJ)
CAIVRS is used by federal agencies and by private lenders who participate in federal loan programs to make sure that people who are delinquent on their federal loans are not lent additional money via federal loan programs. For example, if you have a defaulted federal student loan, you are typically ineligible for other federal loan programs – for example, from the SBA.
If you are concerned that you might be in CAIVRS, you can check your credit report. Most credit reports will show if you have any federal debts that are in default. You can also contact federal agencies who you have prior loans with to verify.
Here are some additional things to keep in mind about CAIVRS:
- CAIVRS is only a database of defaulted federal debts. It does not include debts that you owe to private lenders.
- CAIVRS only reports data provided by federal agencies. Updates and corrections must be made and re-submitted by the original reporting agency.
- CAIVRS does not track debts that have been paid off. It is only used to track defaulted federal loans
- CAIVRS is not a public database. Only authorized users – such as government employees and staff of lenders participating in government-backed loan programs – can access it.