PLEASE NOTE…..
We are currently updating our website to reflect recent major changes to relief options for federal student loan borrowers, including President Biden’s announcement of widespread student debt cancellation on August 24, 2022. Thank you for your patience while we update our website. In the meantime, please check our blog including what borrowers need to know about the student debt cancellation announcement, and studentaid.gov for information about managing your federal student loans from the U.S. Department of Education, including information about the payment pause and about President Biden’s announcement that many borrowers will be eligible for $10,000 to $20,000 of student loan cancellation.
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Getting out of default on federal student loans is hard, but not impossible. If you are able to get out of default through rehabilitating or consolidating your loans, you will once again be eligible for the more flexible pre-default repayment options as well as deferments.
The two main post-default repayment programs for government loan borrowers are consolidation and rehabilitation. Before considering these options, you should evaluate whether you are eligible to cancel your loan. You may also want to think about whether you have enough money to settle your student loan debt.
As you think about rehabilitation and consolidation, try to be realistic about whether you can afford to make even very small payments each month. You want to avoid rehabilitating or consolidating your defaulted loans and then defaulting again because you are unable to meet your new obligations.
The Department of Education has on-line information about how to get out of default. Beware that the Department generally favors rehabilitation over consolidation and so its collectors may try to steer you into that option. Rehabilitation is a good program for many borrowers, but not for everyone. You should do your best to avoid pressure to select a particular option and ask questions about all of the available programs. You should also ask more about the collection fees the government will charge you in some cases.
Be advised that you are entitled to get out of default through rehabilitation only once per loan. There are also limits on how many times you can consolidate.
Download and print out this worksheet to help you review your options and determine whether consolidation or rehabilitation is right for you.