Repaying Defaulted Student Loans
If you have stopped making payments or defaulted on your student loan(s), you can bring the loan(s) into good standing. This is important if you are planning to go to school, because additional financial aid is not available until existing student loans are current. When you default on student loans:
The main ways out of default are rehabilitation or loan consolidation (or paying in full). The first step to bring a loan into good standing is to contact the holder of your loan, explain your situation, and ask if you are eligible for the rehabilitation program. This program would require you to make payments again although you might be able to renegotiate the payment terms to lower your monthly payment. Loan rehabilitation usually requires nine affordable monthly payments within 10 months. The loan will be taken out of default and you will regain eligibility for additional financial aid and deferment. To find the agency that holds your loan, look on your monthly repayment coupon.
For a more detailed explanation of the options go to:
studentaid.gov/manage-loans/default
Default Resolution Group (for many federal default questions):
Phone: 1-800-621-3115
TTY: 1-877-825-9923
myeddebt.ed.gov/borrower/
- The entire unpaid amount of the loan becomes due and payable immediately. For example, if you had a $20,000 loan to be paid over ten years, the entire amount plus interest and late charges would become due in a single payment.
- You become ineligible to receive additional federal financial aid.
- You lose all loan deferment opportunities.
- The default is reported to credit-rating agencies.
- If you stay in default, collection can include wage garnishment and Treasury Offset (taking tax refunds and some federal payments).
The main ways out of default are rehabilitation or loan consolidation (or paying in full). The first step to bring a loan into good standing is to contact the holder of your loan, explain your situation, and ask if you are eligible for the rehabilitation program. This program would require you to make payments again although you might be able to renegotiate the payment terms to lower your monthly payment. Loan rehabilitation usually requires nine affordable monthly payments within 10 months. The loan will be taken out of default and you will regain eligibility for additional financial aid and deferment. To find the agency that holds your loan, look on your monthly repayment coupon.
For a more detailed explanation of the options go to:
studentaid.gov/manage-loans/default
Default Resolution Group (for many federal default questions):
Phone: 1-800-621-3115
TTY: 1-877-825-9923
myeddebt.ed.gov/borrower/
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Cancellation of a Student Loan
Some federal student loans can be discharged or forgiven in different situations (for example, Total and Permanent Disability (TPD) discharge is one option if you meet the program rules). TPD eligibility is based on specific documentation (often SSA, VA, or medical certification)—it’s not based on a HIV/AIDS diagnosis name alone. It is unclear how canceling past loans might affect your ability to get student loans in the future.
Further resources and helpful information:
StudentAid: studentaid.gov/manage-loans/default or studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge
StudentAid: default help article:
studentaid.gov/help-center/answers/article/what-should-i-do-if-loan-in-default
StudentAid: rehabilitation income/expense instructions:
studentaid.gov/manage-loans/default/get-out/rehabilitation-income-expense-instructions
StudentAid: TPD discharge info (medical professionals page):
studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge/medical-professionals