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FEDERAL LOAN DEFAULT FAQs

Peruse our frequently asked questions about federal loan default.

How can I pay my defaulted student loan in affordable monthly payments?
How do I re-establish my eligibility for additional federal student aid and go back to school?
My credit record is tarnished due to default. How man I improve my credit record?
My lender says my loan is "claim pending". What does that mean?
I am in school. Why am I getting billed and how can I be delinquent?
I can't pay my loan. What do I do now?
How do I get my loan out of default?
When do I start repayment?

How can I pay my defaulted student loan in affordable monthly payments?

All guaranty agencies and the U.S. Department of Education will accept regular monthly payments that are both reasonable to the agency and affordable to you. Contact the Department of Education at 1-800-621-3115 and a customer service representative will assist you with determining a repayment amount that is right for you.

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How do I re-establish my eligibility for additional federal student aid and go back to school?

There are several ways to restore your eligibility to receive additional federal student aid. They include:

  • Repay your loan in full
  • Make six agree-upon on-time monthly payments over a six month period
    • Your payment amount must be approved in advance by the Department of Education
  • Consolidate your loan
  • Visit https://www.myeddebt.com/borrower/ for additional information

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My credit record is tarnished due to default. How man I improve my credit record?

Failure to repay your defaulted student loan can be damaging to your credit record. In fact, consumer reporting agencies may continue to report an account for 7 years from the opening date. Repaying or rehabilitating your loan is the best option to start the process of repairing your credit. You can also consider loan consolidation.

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My lender says my loan is "claim pending". What does that mean?

If your loan is "claim pending", then your lender has filed a default claim with the guarantor of the loan when the delinquency reaches 270 days past due. "Claim pending" means the guarantor is reviewing the claim package filed by the lender, but, hasn't yet paid it for your loan(s). If your account is currently in this status, it might still be possible for you to avoid the consequences of default. However, you must act immediately because once your lender files a default claim, there is a limited amount of time before the guarantor will pay it.

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I am in school. Why am I getting billed and how can I be delinquent?

If you are in school and getting billed for your student loan, it could be due to a few reasons:

  1. You transferred to a new school and the lender does not have a new enrollment verification
  2. You dropped below half-time OR
  3. You are attending school beyond your anticipated graduation date provided by your school

You should contact your lender and provide proof of your in-school status whenever your circumstances change. If you fail to do so, then your lender expects you to begin repayment once your grace period ends. If you have already entered repayment, but you recently returned to school and you need to request an in-school deferment.

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I can't pay my loan. What do I do now?

Deferment and forbearance options are available to temporarily suspend your loan payments if you are enrolled in school at least half-time, unemployed, or experiencing financial hardship. Alternative repayment schedules that might make it easier to afford your monthly payments.

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How do I get my loan out of default?

In order to get a loan out of a defaulted status, the loan has to be paid off by some means. A borrower can either pay the loan(s) off himself, have the loan(s) consolidated by another agency, or have the loan(s) rehabilitated. These can be accomplished by contacting the agency that is holding the defaulted loan(s) and setting up a voluntary repayment agreement with that agency.

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When do I start repayment?

The repayment period on a Federal Stafford Loan begins no later than 60 days following the last day of the grace period. This one-time grace begins when you cease to be enrolled at least half-time (i.e. graduate, drop below half-time status or withdraw from school) and lasts for 6 months.

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