Failure to pay student loans is a serious matter that deserves a lot of attention. Before you apply for student loans, it is good to learn more about the consequences of default, how to avoid it, and if you do not meet the deadline, how to get out of it. Can you default on federal student loans?
If you have missed a payment or are having trouble making a payment, contact your billing and other loan-related services immediately to discuss your loan repayment.
Please contact customer support for the William D. Ford Federal Loan Program or the Federal Family Loan Program.
For Perkins federal loan program, contact the school where you received the loan for details. If you know that your Perkins loan has been assigned to the US Department of Education, contact your federal ECSI Perkins Loans Representative.
Loan rehabilitation
One of the options to get out of your arrears is to renew your loan. To start the loan repair process, you must contact the holder. If you are not sure who your loan holder is, you can log in and select “View loan servicer details” for contact details of the loan holder.
To rehabilitate a direct or default FFEL loan by default, you must agree in writing to make nine voluntary, reasonable and affordable monthly payments (as specified by the loan holder) within 20 days of the due date, and make all nine payments over a period of 10 consecutive months.
Under the loan renewal agreement, the borrower will set a reasonable monthly payment amount of 15 percent of the annual discretionary income divided by 12. The discretionary income is the amount of adjusted gross income (from the last federal income tax return) that exceeds 150 percent of the amount indicated in poverty for your condition and family size. You must provide income documentation to the loan holder.
Loan consolidation
Another option for default is the consolidation of the student loan that is the default, into a direct consolidation loan. Loan consolidation allows you to pay back one or more federal student loans with a new consolidation loan.
To consolidate a federated student loan that is defaulted on a new direct consolidation loan, you must either agree to repay a new loan from direct consolidation under an income-based repayment plan, or make three consecutive, voluntary, timely, full monthly payments for an unpaid loan before its consolidation.
Repayment in full
An option to exit the default is also to repay the full amount of the outstanding student loan.
