How to Get Out of Default on School Loans

Not repaying your school loans places your debt into "default" status. According to the National Consumer Law Center, federal student loans fall into default after you miss nine months of payments. Private student loans, however, can fall into default if you miss a single monthly payment. The process for getting out of default on your student loans differs depending on whether your loans are private or federal. If you leave your loans in default, you could face severe consequences such as wage garnishment, a poor credit rating and losing your annual tax refund.

Instructions

Private Student Loans

1

Review your original loan contract. Sometimes private student loan contracts contain information regarding how borrowers can redeem a defaulted private loan.

2

Contact your lender. Explain your missed payments and ask about your options for restoring your student's loans standing. Your lender can inform your how many payments you must make before it revokes your loan's defaulted status.

3

Negotiate a monthly payment plan with your lender that you can afford but that also allows you to catch up on your loan payments and any additional fees you incurred by making payments late.

4

Make the required amount of on-time payments. Contact your lender after you satisfy the requirements for restoring your loan's status to ensure that your loan is no longer in default.

Federal Student Loans

5

Contact the U.S. Department of Education at (800) 433-3243. Give the representative your name, Social Security number and account number. Notify the representative that you want to rehabilitate your defaulted federal student loan.

6

Negotiate a payment plan with the U.S. Department of Education, which may alter your monthly loan payments, within reason, to make them more affordable and help you catch up on your loan payments.

7

Submit your payments on time for nine months. After nine months, your federal student loan will no longer be in default and the U.S. Department of Education will update your credit reports to reflect the loan's status as "current."