Defaulting happens when you go 270 days or more without making a payment on your loan. If you default on a federal student loan, you lose eligibility to receive federal student aid and you may experience serious legal consequences. However, there are two (2) main ways to get out of this situation. Additionally, completion of either of these methods will help you regain eligibility for benefits that were available on the loan before you defaulted, and you’ll be eligible to receive federal student aid again.

Getting Out of Default

Of course it must be stated that the quickest way to get out of default is to repay the defaulted loan in full, but that's not a practical option for most borrowers.

Therefore you are left with Loan Rehabilitation or Loan Consolidation -

1. ​Loan Rehabilitation​ - To rehabilitate a defaulted Direct Loan or FFEL Program loan, you must:

  • agree in writing to make nine (9) voluntary, reasonable, and affordable monthly payments (as determined by your loan holder) within twenty (20) days of the due date, and
  • make all nine (9) payments during a period of ten (10) consecutive months.

Once you have made the required nine (9) payments, your loans will no longer be in default.

2. ​Loan Consolidation​ - To consolidate a defaulted federal student loan into a new Direct Consolidation Loan, you must either:

  • agree to repay the new Direct Consolidation Loan under an income-driven repayment plan; or
  • make three (3) consecutive, voluntary, on-time, full monthly payments on the defaulted loan before you consolidate it.

Loan consolidation allows you to pay off one or more federal student loans with a new consolidation loan.

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