Janice Lozano
Defaulting on student loans can have serious consequences, so it's important to know who to contact to pay them off and resolve the issue. The first step is to contact your loan servicer, lender, or the current holder of the loan to discuss your options. You can also call the Default Resolution Group at the US Department of Education or speak to a Department of Education Customer Service Representative. If you're unsure who your loan servicer is, you can log in to the Federal Student Aid website to find out and access their contact information. The financial aid office at your school can also provide you with information about your lender and offer advice on repayment. It's important to act quickly and consider options like loan rehabilitation, consolidation, or negotiating with your lender to resolve the default.
| Characteristics | Values |
|---|---|
| What to do if you have defaulted on a federal student loan | Contact your servicer immediately. Ask about income-driven repayment, deferment, and forbearance. |
| What to do if you have defaulted on a private student loan | Contact your lender to ask about your options. Consider contacting a student loan lawyer. |
| How to contact the US Department of Education | Call the toll-free customer service number. Log in to the Federal Student Aid website to find out who your loan servicer is and get their contact information. |
| What to do if debt collectors are harassing you | Submit a complaint to the Consumer Financial Protection Bureau. |
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What You'll Learn
Contact your loan servicer
If you have defaulted on your student loan, it is important to act fast to prevent or halt further consequences. Contact your loan servicer immediately to discuss your options for repayment.
The first step is to identify your loan servicer. If you are unsure who your loan servicer is, you can find this information by logging into the Federal Student Aid website. Here, you will be able to access your loan servicer's contact information.
Once you have identified your loan servicer, you can reach out to them directly. They will be able to provide you with specific guidance and options for resolving your defaulted loan. It is important to be proactive and communicate your situation honestly. Many private lenders are willing to help borrowers get back on track by offering temporary solutions, such as lowering monthly payments or allowing a pause in repayment through deferment or forbearance.
If you have a federal student loan, the U.S. Department of Education offers several ways to recover from default, including repayment, consolidation, and rehabilitation. For example, you may be able to make three consecutive, on-time monthly payments to resolve the default. Alternatively, you can agree to repay your new loan under an income-driven repayment plan. If you need to access financial aid again, consolidation may be a faster option, although it will not remove the default from your credit report.
Remember, the key is to take action promptly and work collaboratively with your loan servicer to find a solution that fits your circumstances.
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Understand your rights
If you've defaulted on your federal student loan, you have certain rights that you should be aware of. Firstly, understand that defaulting on a loan means that you have failed to repay it according to the agreed-upon terms in the promissory note. For most federal student loans, this means non-payment for more than 270 days (9 months). During this period, your loan servicer must make diligent efforts to collect the loan.
Once your loan is in default, you may face several consequences. Your tax refund or Social Security check could be withheld and applied towards your defaulted loan. Credit reporting companies will be notified, which typically leads to a lower credit score for you. Additionally, you may not be eligible for further federal student aid until you take the necessary steps to resolve your default status.
Despite these consequences, you still have options to manage your defaulted federal student loan. You can arrange for repayment options with the debt collector to get out of default. One such option is the Saving on a Valuable Education (SAVE) plan, which is an income-driven repayment plan with benefits like lower payments and interest rate adjustments that can help borrowers.
Moreover, the U.S. Department of Education offers a one-time temporary initiative called the Fresh Start Program, specifically designed to assist borrowers in getting their federal student loans out of default status. Remember, you also have the right to fair treatment from banks, lenders, and financial companies, which is overseen by the Consumer Financial Protection Bureau (CFPB), a U.S. government agency.
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Loan rehabilitation
Once you have made the agreed-upon number of payments, your loan will be considered rehabilitated, and it will no longer be in default. This means that any collections or penalties associated with the default, such as wage garnishment or tax refund offsets, will stop. Your loan will then be transferred back to a regular repayment status, and you will need to continue making monthly payments to avoid defaulting again.
It is important to note that loan rehabilitation is a one-time opportunity. If you default on your loan again after rehabilitating it, you will not be able to use this option a second time. However, this rule does not apply to borrowers who rehabilitated their loans during the pandemic payment pause or those who used the Fresh Start programme to exit default.
To find out more specific information about loan rehabilitation and how it applies to your situation, it is recommended to contact your loan holder or servicer directly. They can provide you with the details of your loan and guide you through the process of rehabilitating your defaulted student loan.
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Consolidation
Loan consolidation is a way to get your student loan out of default. By consolidating your defaulted loans into a new Direct Consolidation Loan, your loan will be removed from default, and all collections will stop. Additionally, you will be able to access affordable loan repayment options through the income-driven repayment (IDR) program.
To apply for loan consolidation, you can submit an application online or on paper. In your application, you must either agree to repay the new Direct Consolidation Loan under an IDR plan or make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before consolidation. Contact your loan servicer for more information about consolidating defaulted student loans.
It is important to note that there are downsides to consolidating your loans, and it may not be the best option for getting your loans out of default. Therefore, it is recommended to review the pros and cons of consolidation before proceeding. Most federal student loans are eligible for consolidation, including Perkins Loans, which can now be consolidated into a Direct Loan without any other federal loans.
After consolidating your loans, you will need to continue making monthly payments to avoid defaulting again. If you consolidated by agreeing to an IDR plan, your payment amount will be based on that plan. However, if you consolidated by making three full payments, you can choose any eligible repayment plan, including IDR plans. Under an IDR plan, your payments are determined by your income and family size and could be as low as $0 per month. Remember to discuss loan repayment options with your loan holder or servicer before repayments commence.
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Student loan lawyers
Student loan attorneys can be particularly useful when dealing with rule-breaking lenders and collectors. They can help you understand your rights and fight for them, ensuring that you don't fall victim to scams or identity theft. These lawyers can also assist in exploring various repayment options and determining if loan consolidation is a suitable choice for your situation.
For instance, Attorney Adam S. Minsky is licensed in Massachusetts, New York, and Vermont, and has dedicated his practice to helping student loan borrowers. Similarly, Long, Burnett, and Johnson, PLLC, based in Nashville, TN, offer legal advice on student loan debt, including bankruptcy options.
It's important to remember that defaulting on your debt can cause extra problems, so consulting a student loan lawyer to explore your options is a wise decision. They can provide personalized guidance based on your unique circumstances, whether you're a recent graduate or dealing with long-term student loan debt.
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Frequently asked questions
You should contact the US Department of Education by calling 1-800-621-3115.
You can log in to the Federal Student Aid website to find out who your loan servicer is and get their contact information.
You can borrow federal student loans to get out of default through options like loan rehabilitation and consolidation. You can also set up a payment plan with your loan servicer or lender.
The consequences of not paying off defaulted student loans include wage garnishment, withholding of tax refunds and other government payments, and negative impacts on your credit report.
Ask your lender about possibilities for getting out of default. They may have options similar to federal loan default programs, or you may be able to negotiate a resolution or settlement.
