How To Get Student Loans Out of Default
Federal default starts at about 270 days past due: After roughly nine months of missed payments, the full balance comes due and the government can garnish wages and offset your tax refund.
Rehabilitation takes nine on-time payments over 10 months: It's the only option that removes the default from your credit report, though the earlier late payments can stay for about seven years.
Private loans follow the lender's own rules: Federal rehabilitation and consolidation don't apply — a lender may offer a repayment plan, hardship program or settlement, but nothing is guaranteed.
If you have a federal loan, you can get back on track through rehabilitation, consolidation and a repayment plan. Federal student loans generally go into default if you've missed around 270 days without payments — or about nine months. Rehabilitation can be one way and it may take around nine payments in 10 consecutive months of making on-time payments.
For private loans, getting back on track means having a conversation with your lender to see what options are available. The private lender may offer a repayment plan or hardship options.
Whether you have a federal or private student loan, to get back on track means having a frank conversation with your lender and finding out what move is best for your financial situation.
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How To Get Student Loans Out of Default Fast
To get your student loan out of default, you've got to be armed with the right information. The route you take will depend on whether you have a federal or private loan and who owns your loan. Here’s an actionable list of questions for your next steps:
Do you have a federal loan or private loan?
Who services the loan?
What default resolutions are available for me?
What plan works best for me: rehabilitation, consolidation, repayment in full or private-loan options?
Do you have the new terms in writing?
Have you set up an affordable repayment plan after your default is resolved?
Confirm Your Loan Type and Who Owns It
Federal vs. Private Loan
You need to find out if you have a federal or private loan.
Federal loan: You have options available to get your loan back on track including rehabilitation, consolidation or a repayment plan.
Private loan: The options may vary based on the lender. Your choices may include a repayment agreement, hardship assistance or other options.
Finding Out Who Services Your Loan
To find out who services your federal loan, log in to StudentAid.gov with your FSA ID information. The dashboard will show you every federal loan and who currently holds the account. If you're in default, the loan will be moved to The Default Resolution Group. That information will be located on the dashboard.
If it's a private loan, it won't be on this dashboard. Instead, you'll have to look at your loan documents and any communications from the servicer, or you can pull your credit report.
Who To Contact For Your Federal Loans
What stage is your loan in? | Who to contact | What to ask |
|---|---|---|
Federal loan in default but not sent to collections | Look at the servicer in your StudentAid.gov dashboard | Verify that your loan is still with the servicer. Ask about rehabilitation, consolidation and your current default status. |
Federal loan in default sent to collections | The Default Resolution Group at 1-800-621-3115 | Ask about what resolution options are available for you and what rehabilitation payment would work. |
Federal loan in default sent to a guaranty company — usually FFELP loans, generally pre-2010 | Look at student loan servicer providers in your StudentAid.gov dashboard | Ask about what resolution options are available for you. |
Who To Contact For Your Private Loans
Where's your loan? | Who to contact | What to ask |
|---|---|---|
Original lender or servicer | Servicer on your loan documents or listed on your credit report | Is there a debt resolution option available? Get any agreement in writing. |
Third-party collection agency | Listed on your credit report or communication from the collection agency | Ask that the debt be validated within 30 days of being contacted. Ask whether they'll settle the debt for less than you owe. |
What Are the Best Options for Getting Student Loans Out of Default?
How should you approach your student loan default? Each option below has its pros and cons. You'll need to go with the choice that fits your overall financial picture.
Option | How it works | Best for | Main trade off |
|---|---|---|---|
Loan rehabilitation | You make nine consistent agreed-upon payments and then the default notation will be removed from your credit report | Those who want to protect their credit | Takes nine to 10 months and can only be used once per loan |
You roll multiple loans into one loan | Those who want to resolve their debt quickly | Doesn't remove the default status on your credit report | |
Repayment in full | Borrower pays the full amount in a lump sum or with several payments | Those who have steady income and can afford to make payments either in a lump sum or periodically | May not be an ideal option if you have other high-interest debt. You may want to address those loans first. |
Private lender | Borrowers who want to negotiate with their private lender — it could be a repayment plan or hardship option | Best for those who want to get out of default with their private lender | Processes vary between each lender — options also vary |
What You Need To Know About These Options
Fastest option: A Direct Consolidation Loan offers a quick way to resolve your default for eligible federal borrowers. However, the main disadvantage is the default notation stays on your credit report. You must agree to make three consecutive, voluntary and on-time payments under an income-driven repayment plan.
Best for your long-term credit: Although it takes longer — approximately nine to 10 months — rehabilitation may be a better fit for your future credit. The default status will be removed from your credit report, which will help when you need to get a loan for a car or house in the future. Though, keep in mind late payments on your credit report previously can still remain for around seven years.
Options vary with private lenders: What a private lender may offer for your default can vary. Some may offer hardship programs, repayment plans or settlement plans. However, none of these options are a guarantee. For private loans, federal rehabilitation or consolidation does not apply.
Contact an attorney if you've been sued: If the lender has sued you to collect the defaulted amount, it may be time to contact an attorney to weigh your options.
What Happens If Your Student Loans Stay In Default?
If your student loan stays in default, it could be detrimental not only to your credit, but you also risk other severe consequences. Here’s what could happen depending on whether you have a federal or private student loan:
Consequence | Federal loans | Private loans |
|---|---|---|
Credit damage | Severe, long-lasting impact | Severe, long-lasting impact |
Ability to garnish wages | No need for a court order | Need to file a lawsuit and get a court order |
Tax refund offsets | Yes | No |
Social Security offsets | Yes | No |
Lawsuits | Not as common | More common |
Future federal aid | Will likely not qualify | No impact |
Collection costs | Can be hefty | Varies by your creditor |
The Main Differences Between Federal and Private Loan Lenders
If you default on a federal loan, lenders have more tools at their disposal to collect the amount. They can reduce your tax and certain Social Security benefits and also garnish wages without a court order. With a private loan in default, the lender will likely sue to collect the default amount. Keep in mind that while your default is ongoing, balances will continue to rise because of interest, fees and collection costs.
Keep in Mind
Once your loan is in default, communication with your lender is important. Waiting means adding costs, receiving collection pressure and risking severe credit damage.
What To Do After Your Loan Is Out Of Default
You're back on track with your loan payments and finally out of default. What should you do next to keep the payment momentum going?
Pick a payment plan you can afford: If you're paying back a federal loan, you can opt for an income-driven repayment plan. Your payment will increase or decrease based on your earnings. After 20 to 25 — or in some cases, even 30 — years of consistent payments, you may qualify to have the remaining balance forgiven.
Use autopay: To stay on track with your payments, use autopay for your loan payments so you don't accidentally default.
Always keep your income information current: If your repayment is based on income, make sure to inform the lender of any changes in family size and salary.
Pull your credit report: You can pull your credit report from TransUnion, Equifax and Experian for free weekly. Make sure your loan status updates are made, and if you opted for a rehabilitation, the default note is removed.
Keep an eye out for scams: Don't fall for third-party vendors that look suspicious. Always look for assistance through official government resources on your federal loans.
What Is the Repayment Assistance Plan (RAP)?
On July 1, 2026, the Repayment Assistance Plan (RAP) became an option for federal student loan borrowers. Your monthly payment amount is based on your adjusted gross income from your most recent tax returns and number of dependents. The adjustment is made annually.
Who Qualifies for RAP
Are you eligible for RAP? Here's who qualifies:
Loans disbursed prior to July 1, 2026: You can opt for RAP or another eligible repayment plan.
Loans disbursed on or after July 1, 2026: RAP is the only income-driven repayment plan available to those borrowers, but other repayment plan options may be available.
Parent PLUS loan and FFELP are excluded from RAP. FFELP borrowers have the option for an income-based repayment plan.
How RAP Payments Are Calculated
Your RAP payments are based on a percentage of your AGI. It's typically a sliding scale starting at 1% and capped at 10%. You have a minimum payment of $10 no matter your income. Also, each dependent reduces your monthly payment by $50.
Adjusted gross income (AGI) | Base payment |
|---|---|
$10,000 or less | $120 per year |
More than $10,000 to $20,000 | 1% of AGI |
More than $20,000 to $30,000 | 2% of AGI |
More than $30,000 to $40,000 | 3% of AGI |
More than $40,000 to $50,000 | 4% of AGI |
More than $50,000 to $60,000 | 5% of AGI |
More than $60,000 to $70,000 | 6% of AGI |
More than $70,000 to $80,000 | 7% of AGI |
More than $80,000 to $90,000 | 8% of AGI |
More than $90,000 to $100,000 | 9% of AGI |
More than $100,000 | 10% of AGI |
With an AGI of $55,000 you’ll pay $2,750 annually. This means monthly your payment is $229. If you've got one dependent you’ll pay $179.
RAP's Interest Subsidy and Principal Match
When you make your full RAP payments on time, you also gain two advantages. First, unpaid interest gets waived when you make on-time, full payments. Second, if your payment covers less than $50 of your principal, the government will cover the difference.
Loan Forgiveness Under RAP
Under RAP, PSLF borrowers are eligible for forgiveness after 10 years of qualifying payments. For other loans forgiveness occurs after 30 years of qualifying payments.
Final Take
Defaulting on your student loan isn't the end of your financial world. You just need to take the necessary steps to get your loan back on track. If you have a federal loan, compare whether rehabilitation or consolidation works better for you. If you have a private loan, you’ll communicate with the lender or servicer on what options are available.
If you're unclear which loan you have, communicate with your lender. It's the first important step to get your loan back into good standing.
Key Terms
Default: A federal loan's status after roughly 270 days, or about nine months, without a payment. The full balance becomes due and collections can begin.
Loan rehabilitation: A one-time program to exit default by making nine voluntary, on-time payments within 10 consecutive months, which removes the default notation from your credit report.
Direct Consolidation Loan: A new federal loan that pays off existing loans and used to exit default by agreeing to an income-driven repayment plan or making three on-time payments first.
Default Resolution Group (DRG): The U.S. Department of Education unit that manages defaulted federal loans and handles rehabilitation, consolidation and repayment agreements.
Wage garnishment: Withholding part of your paycheck to repay debt. The federal government can garnish disposable pay without a court order, while a private lender must sue first.
Treasury offset: The government's withholding of tax refunds and some federal benefits, such as Social Security, to collect defaulted federal loans.
Income-driven repayment (IDR): A plan that sets your federal payment based on income and family size, which can help you avoid re-defaulting once you're back in good standing.
Loan servicer: The company that manages billing and payments on your loan; find your federal servicer by logging in to StudentAid.gov.
Sources
Federal Student Aid (FSA): Student Loan Default and Collections: FAQs
FSA: Student Loan Rehabilitation for Borrowers in Default: FAQs
Consumer Financial Protection Bureau (CFPB): Student loans
AnnualCreditReport.com: Free credit reports
Nelnet: What Is the Repayment Assistance Plan (RAP)?
Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.
Rudri Bhatt Patel, CFHC™ contributed to the reporting for this article.
Photo credit: aldomurillo/Getty Images
FAQs
Rehabilitation of federal loans takes nine months of consecutive payments for the default notation to be removed. Consolidation requires less time, but the default notation remains on your credit report.
Your student loans don't go away after seven years. They remain the borrower’s obligation until the loan is paid, discharged or forgiven.
Private loans don't have the same federal rehabilitation rules. However, private entities will have their own resolution methods.
Once your loans are out of default either through rehabilitation, consolidation or full repayment, you're eligible for RAP. You can log in to your Nelnet account to check eligibility. Keep in mind not all loans qualify.
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