Loan cut-off dates are used to give a return date of what has been set irrelevant of what the loan period of an item is if the due date is past the assigned cut-off date.

Example -

If a Year 12 student borrowed a book on the 7th of November, regardless of the loan period attached to that resource the due date of the loan would be the 11th November. 

Setting loan cut-off dates enables you to have loans returned (and follow ups done) prior to students finishing for the end of year holidays.

The DEFAULT date you set applys to every level of borrower not specifically mentioned in the set cut-off dates. In this High School example the DEFAULT cut-off date would apply to the Year 8, 9 and 10 students (anyone who is not Staff or Level 11 or 12).