<\/a><\/p>\n Default comes at the end of a lengthy process when you are unable to make your required monthly payments. On the day after you miss your first payment, you become delinquent on your loans.<\/p>\n At this point, you can work with your loan servicer to come up with a plan to get your account current. This can include changing your repayment plan or using deferment or forbearance options to give you the time you need to get your finances back in order.<\/p>\n If you are unable to get caught up on your loan payments, your delinquent loan may go into default<\/a>. The timeline for this can vary based on the type of federal student loan you have.<\/p>\n But in most cases, your loan goes into default after 270 days of delinquency. When this happens, your entire loan comes due immediately, including interest and fees.<\/p>\n Once you\u2019re in default, you lose eligibility for future student aid. However, there are a few strategies you can use to put yourself in a position to return to school with defaulted student loans.<\/p>\n Learn More:<\/i><\/b> What Happens When You Default on a Student Loan<\/i><\/a> Student loan rehabilitation is a formal agreement between you and your loan servicer that will get your loans out of default \u2014 if you complete it successfully. You agree to make nine consecutive voluntary payments, at an amount set by your loan servicer, within 20 days of their due date. These payments are usually for 10 consecutive months for Direct Loans and FFEL Federal Family Education Loans (FFEL) and nine months for Perkins loans.<\/p>\n But any involuntary payments you\u2019re making while in default \u2014 like wage garnishment<\/a> \u2014 are likely to continue in addition to your loan rehabilitation. Wage garnishment is when a portion of your paycheck is sent directly to your creditor, and this won\u2019t count toward your nine voluntary loan payments. So, if your wages are currently being garnished, loan rehabilitation may not be a good option for you.<\/p>\n To rehabilitate your defaulted student loans, contact your loan servicer first. If you\u2019re eligible for loan rehabilitation, your servicer will ask you to provide your latest tax return.<\/p>\n With this information, your loan servicer will determine a monthly payment you can reasonably afford, and send you a loan rehabilitation agreement within 15 days. Your \u201creasonable monthly payment\u201d is generally determined by calculating 15% of your annual discretionary income, divided by 12.<\/p>\n When you sign and return this agreement, you can formally enroll in loan rehabilitation. Once you\u2019ve made your nine payments successfully, your loans will no longer be in default and any wage garnishment or other collection procedures will end.<\/p>\n You\u2019ll also once again be eligible for federal student aid, making it easier to afford to go back to school.<\/p>\n Loan rehabilitation is a one-time offer. If you default on your loans again, you will no longer be able to choose loan rehabilitation as an option.<\/p>\n Check Out:<\/i><\/b> Defaulted Student Loans: Can You Refinance?<\/i><\/a> Another way to fix your default status is to consolidate your loans into a federal Direct Consolidation Loan. This loan pays off and replaces your current education debt, combining your accounts into a single, new loan.<\/p>\n Your federal Direct Consolidation Loan will have an interest rate that\u2019s an average of your former loans. If you have a loan in default, you can only use loan consolidation under two conditions.<\/p>\n You have a few different options, but generally these payments will be set at a certain percentage of your discretionary income \u2014 in most cases, the difference between what you earn and 150% of the federal poverty line in your area.<\/p>\n But you are not eligible to consolidate your defaulted student loans if your wages are currently being garnished. You\u2019ll need to have the garnishment order lifted or the judgment vacated in order to consolidate your loans.<\/p>\n You\u2019ll also need to have another student loan to consolidate your defaulted loan with. If your defaulted student loan is the only one you have, you won\u2019t be eligible for a consolidation loan.<\/p>\n If you\u2019re struggling to make payments on a federal consolidation loan, here are a few options to consider:<\/p>\n Read More:<\/i><\/b> Student Loan Rehabilitation vs Consolidation: Getting Out of Default<\/i><\/a> Depending on your loan servicer and the types of loans you have, you may also be able to negotiate a debt settlement. In general, a debt settlement is an agreement to accept a lower amount to consider your loan paid in full.<\/p>\n You\u2019ll often need to make this payment as a lump sum or, at most, over the course of one year. Both federal student loans and private student loans are often eligible for debt settlement.<\/p>\n Debt settlement may be a good option if you\u2019ve racked up a significant amount of unpaid interest and late fees. Your loan service may be willing to accept a settlement that waives a lot of the fines and fees, leaving you with your standard interest and fees to pay.<\/p>\n But make sure to watch out for companies that advertise debt settlement services. These companies may offer to settle your debt for you in exchange for an up-front fee. In some cases, these arrangements can lead to you being taken advantage of and can even run afoul of the law. So, research debt settlement companies before making a decision.<\/p>\n If debt settlement seems like the right fit for your needs, follow these four steps:<\/p>\n Just remember that this will likely come with fees that you\u2019ll have to pay on top of your settlement.<\/p>\n Learn More:<\/i><\/b> Here\u2019s How Many People Default on Their Student Loans in the U.S.<\/i><\/a> After resolving a student loan default, you could regain your eligibility for further federal financial aid and return to school. If you\u2019re ready to go back to school and need help paying for it, follow these four steps:<\/p>\n If you decide to take out a private student loan, be sure to consider as many lenders as possible to find the right loan for your needs. Credible makes this easy \u2014 you can compare your prequalified rates from multiple lenders in two minutes.<\/p>\n The companies in the table below are Credible\u2019s approved partner lenders. Whether you\u2019re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.<\/p>\n\nWhat are my options if I want to go back to school with defaulted student loans?<\/h2>\n
\n<\/a><\/p>\n1. Rehabilitate your defaulted student loans<\/b><\/h2>\n
\n<\/a><\/p>\n2. Consolidate your federal loans<\/b><\/h2>\n
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What if I can\u2019t make the student loan payments after a loan consolidation?<\/b><\/h3>\n
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\n<\/a><\/p>\n3. Negotiate a student loan debt settlement<\/b><\/h2>\n
How to negotiate a settlement<\/b><\/h3>\n
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\n<\/a><\/p>\nHow to go back to school after defaulting on student loans<\/b><\/h2>\n
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