› Forums › Student Loans › What to do if your student loans are in default
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Roy Bush.
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🚨 In Default on Your Student Loans? Here’s What To Do
If your student loans have gone into default, don’t panic — you have several options to fix it and get back on track. Here’s a quick guide:
What Happens When You’re in Default?
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Credit score damage 📉
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Wage garnishment
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Seizure of tax refunds
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Loss of federal aid eligibility
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Collection fees added
Important: For federal loans, default usually means you haven’t paid in 270+ days. For private loans, it can happen even sooner.
âś… First step: Log into studentaid.gov or contact your loan servicer to confirm your loan status.
Your Options to Get Out of Default
1. Loan Rehabilitation
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Make 9 monthly payments (based on your income) within 10 months.
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After completing, the default status is removed from your credit report.
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You regain eligibility for deferment, forbearance, and forgiveness programs.
Note: You can only rehabilitate once per loan.
2. Loan Consolidation
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Combine your defaulted loan(s) into a new Direct Consolidation Loan.
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You must agree to repay under an Income-Driven Repayment (IDR) Plan, or
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Make three consecutive on-time payments first.
Heads-up: Consolidation doesn’t erase the default from your credit report, but it marks the loan as “paid.”
3. Full Payoff
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Pay off the entire balance in one lump sum.
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Not always realistic, but it’s the fastest fix if possible.
Special Notes for Private Loans
Private loan defaults work differently — options vary depending on your lender. Contact them directly to discuss:
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Settlements
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Payment plans
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Refinancing
After You Get Out of Default
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Enroll in an affordable repayment plan (like an IDR plan).
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Set up autopay to never miss a payment again.
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Start rebuilding your credit 🚀.
Need Help?
Drop your questions below or send us a private message! 🎯
We’re here to help you choose the best path based on whether you have federal or private loans.-
- Replies
Hello! If a student has late reporting on their credit report for Federal student loans, it seems the servicers will not remove the late reporting unless the student received public assistance or served in the Peace Corps, were eligible for a natural disaster forbearance, internship/residency deferment, bankruptcy forbearance, cancer treatment forbearance, in school status. I am trying to assist students who were truly late during the months in March where the loans pause had ended.  Many of the dates stary in March 2025. Teh late reporting remains on the credit report and Sallie Mae will not even consider a student for a loan approval if they have a prior student loan that was ever late more than 90 days. We have tried CFPB disputes and credit report disputes, but the servicers continue to respond that they are required to report accurate information to the bureau and no goodwill removal will be considered. I was able to get one student help because she was receiving Medicaid at the time. Any ideas on how to get the servicers to remove the late reporting?
Hi Jburgio,
Federal student loans are reported late after being missed for 90 days. However, loans in forbearance or deferment are not reported as late during that pause period. The reasons for forbearance or deferment are those that you listed. Borrowers who had missed payments for greater than 90 days after January 1, 2025, began being reported to credit bureaus. An “on-ramp” period for credit reporting ended on October 1, 2024, after one year of a Covid-19 Payment Pause (September 2023 – October 2024.)
Tagged: Default, Student Loans
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