Defaulted Student Loans: Can You Refinance?

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When you don’t make payments on a student loan, your loan could end up in default. If you’ve defaulted on a student loan, there are a few ways that could help you recover — such as refinancing your loans.

If you’re looking to refinance defaulted student loans, here’s what you should know:

• Is refinancing an option for student loans in default?
• How to recover from student loan default
• How to avoid student loan default

Is refinancing an option for student loans in default?

Whether you can refinance your student loans when they’re in default depends on what type of student loans you have — federal or private — as well as your financial situation.

Federal student loans in default

If you miss payments on a federal student loan, your loan will be considered delinquent. After a certain amount of time in delinquency, your loan could go into default.

• Direct Loans will go into default if you make no payments for 270 days.
• Perkins Loans can end up in default if you don’t make a payment by the due date. The exact period of time you have before a Perkins Loan goes into default depends on the holder of the loan.

There are also several consequences that can come with federal student loan default, such as:

• Immediate repayment: Your entire unpaid balance as well as any accrued interest will be immediately due.
• Loss of benefits: You’ll no longer be eligible for additional federal aid or federal benefits.
• Loss of earnings: Your wages might be garnished, and tax refunds could be withheld.
• Legal repercussions: You could be sued by the holder of the loan.
• Fees: You could be charged fees associated with collection, such as court costs or attorney’s fees.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in two minutes.

Lender	Fixed rates from (APR)	Variable rates from (APR)	Loan amounts	Min. credit score	Cosigners allowed
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.85%+	5.3%+	$10,000 up to $250,000 (depending on degree)	720	Yes
Fixed APR: 4.85%+ Variable APR: 5.3%+ Min. credit score: 720 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: 720 Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 - $149,000 Max. Graduate Loan Balance: $200,000 - $400,000 Offers Parent PLUS Refinancing: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.8%+1	7.06%+1	$10,000 to $500,000 (depending on degree and loan type)	Does not disclose	Yes
Fixed APR: 6.8%+1 Variable APR: 7.06%+1 Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.99%+2	6.99%+2	$5,000 to $300,000 (depending on degree type)	Does not disclose	Yes
Fixed APR: 6.99%+2 Variable APR: 6.99%+2 Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.0%+5	8.03%+5	$7,500 to $200,000	700	Yes
Fixed APR: 6.0%+5 Variable APR: 8.03%+5 Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 36 months Loan servicer: Granite State Management & Resources (GSM&R) Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.08%+3	5.28%+3	$10,000 to $250,000	680	Yes
Fixed APR: 5.08%+3 Variable APR: 5.28%+3 Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.9%+4	8.12%+4	$5,000 - $250,000	670	Yes
Fixed APR: 5.9%+4 Variable APR: 8.12%+4 Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee, returned payment fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.94%+ 7	N/A	Up to $300,000	670	Yes
Fixed APR: 6.94%+ 7 Variable APR: N/A Min. credit score: 670 Loan amount: Up to $300,000 Loan terms (years): 5, 7, 10, 15, 20 Time to fund: Usually one business day Repayment options: Academic deferral, military deferral, forbearance, death/disability discharge Fees: None Discounts: Autopay Eligibility: Available in all 50 states Customer service: Email, phone Soft credit check: Yes Cosigner release: After 24 months Max. undergraduate loan balance: $300,000 Max. graduate balance: $300,000 Offers Parent PLUS loans: Yes Min. income: None
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.49%+	5.02%+	Up to $300,000	700	Yes
Fixed APR: 4.49%+ Variable APR: 5.02%+ Min. credit score: 700 Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 15 Max. undergraduate Loan Balance: $125,000 Time to Fund: 10 to 30 days Repayment options: Immediate repayment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from an eligible institution Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: LendKey Technologies Inc. Max. graduate Loan Balance: $175,000 Credible Review: LendKey Student Loans review Offers Parent PLUS Refinancing: No
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.75%+	N/A	$10,000 up to the total amount of qualified education debt	670	Yes
Fixed APR: 5.75%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.79%+	N/A	$7,500 up to $250,000 (depending on highest degree earned)	680	Yes
Fixed APR: 5.79%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 - $249,000 Max. Graduate Loan Balance: $200,000 - $249,000 Offers Parent PLUS Refinancing: Yes
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All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures  | 8Nelnet Bank Disclosures

Private student loans in default

In many cases, a private student loan is considered to be in default after missing payments for 120 days, after which it could be sent to collections.

However, keep in mind that the rules for private student loan default vary depending on the lender. If you think you might miss payments on a private loan, it’s a good idea to reach out to your lender to see exactly what triggers a default status and if any assistance is available to you.

Regardless of which strategy you choose to get out of student loan default, you’ll likely still have to repay your entire loan balance. You can estimate how long it’ll take to pay off your student loan debt using the calculator below. Use the slider to see how increasing your payments can change the payoff date.

Learn More:

• Statute of Limitations on Private Student Loans: State Guide
• Applying for Student Loan Unemployment Deferment
  

How to recover from student loan default

There are a few ways to recover from student loan default, depending on whether you have federal or private student loans.

Loan rehabilitation

Best for: Borrowers who can’t afford their federal loan payments

With this option, you must agree to make nine voluntary, reasonable, and affordable monthly payments within 10 consecutive months. Your payments will be equal to 15% of your annual discretionary income divided by 12.

Depending on your income, your monthly payment could be as low as $5 per month with federal student loan rehabilitation.

After you’ve made all nine payments, the Department of Education will request that the credit bureaus remove the default from your account, which might help boost your credit score.

Keep in mind that some private lenders also offer rehabilitation with their own conditions and terms.

Check Out:

• Student Loan Rehabilitation vs. Consolidation: Getting Out of Default
• How to Get Student Loan Repayment Help

Loan consolidation

Best for: Borrowers who have only recently defaulted on their loan and haven’t had their wages garnished.

Another strategy for getting out of federal student loan default is to consolidate your loans into a Direct Consolidation Loan. To be eligible, you must either make three consecutive, on-time, voluntary monthly payments on your defaulted loan, or agree to sign up for an income-driven repayment plan after consolidation.

Keep in mind that if your defaulted loan is currently being paid via wage garnishment or court order, you won’t be eligible for loan consolidation unless the wage garnishment has been lifted or the judgment is vacated.

Learn More: Private Student Loan Consolidation

Repayment in full

Best for: Borrowers who can afford to repay their entire loan balance or who can find financing to do so.

You also have the option to fully repay a federal or private student loan in default. However, this is likely impractical for many borrowers.

Check Out: Can You Pay Your Student Loans With a Credit Card?

Student loan refinancing

Best for: Borrowers who have defaulted in the past or who have a creditworthy cosigner

Refinancing your defaulted student loans — which could help lower your interest rate or reduce your monthly payment — is another potential way to recover from default. However, since private lenders will look at your credit and financial history to determine creditworthiness, you might have a hard time qualifying if you’re currently in default.

If you’re struggling to get approved, consider:

• Applying with a cosigner: Having a creditworthy cosigner could improve your chances of qualifying and might even get you a lower interest rate. Just remember that if you can’t manage your payments, your cosigner will be responsible for repaying the loan.
• Refinancing in the future: It’s possible that you might not be able to qualify for refinancing with a defaulted loan. In this case, it could be a good idea to pursue another option to get out of default, then build your credit before applying for refinancing in the future.

You can use our calculator below to see how much you can save by refinancing your student loans.

Learn More: Federal Student Loans and COVID-19: What You Need to Know

How to avoid student loan default

The best way to deal with student loan default is to avoid it altogether. If you’re having trouble making your student loan payments, here are several options that might help keep your loans out of default:

• Forbearance: With student loan forbearance, you can temporarily pause your loan payments. If you have federal student loans, you might qualify for forbearance under certain circumstances, such as financial hardship, medical bills, changes in employment, or reasons approved by your loan servicer. Some private lenders also offer forbearance options. Keep in mind that depending on the type of loan you have, interest could continue to accrue during the forbearance period.
• Deferment: Like forbearance, student loan deferment is a way to postpone your loan payments for a period of time. If you have federal loans, you might qualify for deferment in certain situations, such as if you’re undergoing cancer treatment, facing economic hardship, or returning to school. Some private lenders offer deferment in specific circumstances as well. Note that interest might continue to accrue while your loans are in deferment.
• Changing repayment plans: Federal student loans as well as some private student loans offer repayment plans that can help make monthly payments more affordable. For example, if you have federal loans, you might be able to sign up for graduated repayment, extended repayment, or income-driven repayment. Certain private lenders — such as RISLA — provide similar options.
• Federal consolidation: You don’t have to be in default to consolidate your federal loans into a Direct Consolidation Loan. With this option, you could extend your repayment term up to 30 years, which can lower your monthly payments. Just keep in mind that having a longer repayment term means you’ll pay more in interest over time.
• Private refinancing: If you’re struggling to afford your payments on federal or private loans, you could also consider refinancing them with a private lender. Depending on your credit, you might qualify for a lower interest rate, which could save you money on interest charges and even help you pay off your loan faster. Or you could opt for a longer repayment term to reduce your monthly payments — though remember that you’ll pay more in interest this way.

If you decide to refinance your student loans, be sure to consider as many lenders as you can to find the right loan for your needs. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Keep Reading: Student Loan Deferment vs. Forbearance: How to Choose

About the author

Emily Guy Birken

Emily Guy Birken is a Credible authority on student loans and personal finance. Her work has been featured by Forbes, Kiplinger’s, Huffington Post, MSN Money, and The Washington Post online.

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