Phoenix Rising Re-Entry

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 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.
• Litigation is started to have money taken from your wages, checking and savings accounts, and/or tax refunds in order to repay your loan.

Repairing a Defaulted Student Loan
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. After you make payments for 6 to 12 consecutive 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:

Department of Education
www2.ed.gov/offices/OSFAP/DCS/index.html