How to Get Student Loans Out of Default

Student loans typically go into default after 270 days of non-payment. Once default occurs, the lender has the right to request full loan payoff and can begin collection procedures, including reporting the default on your credit report, wage garnishment, the seizure of federal tax returns and denial of federal student aid. However, borrowers can go through a process called rehabilitation to bring them out of default. You do not have to meet any eligibility criteria to take advantage of this valuable life line.

Instructions

1

Add together all your sources of income and subtract your expenses, such as housing payments, utilities, food and other debts, to determine how much you can afford to pay each month toward the overdue amount.

2

Contact your lender and request to be transferred to the collection department.

3

Provide the personal information the representative requests. This typically includes your name, Social Security number and loan account number.

4

Tell the representative that you want to rehabilitate your loan and tell her the payment amount you can afford. Depending on your offer and the lender, you may have to submit verification of your income and expenses, such as pay stubs, tax returns, social service benefit statements and copies of bills. Federal regulations require lenders to accept a payment plan if it is reasonable given the borrower's income and expenses.

5

Make nine on-time payments. Federal law requires lenders to remove default status from the loan after nine months of regular payments. The lender must also report the loan as "Paid As Agreed" or something similar on your credit report.