Prevent or Get Out of Default

Defaulting on your federal student loans can have immediate consequences on your credit. The earlier you do something about, the better.

How do I prevent default?

Missing payments for more than 270 consecutive days (nine months) will result in your federal student loans going into default.  You can prevent this by doing the following:

  • Enroll in an Income Driven Repayment (IDR) plan. Your payment will be based on your income. This means that if you have no income, your payment can be as low as $0 and your loans will not go into default.
  • Request a deferment or forbearance. This will temporarily postpone your payments.

Communicate with your student loan servicer before you get to the point of default!

Caution: Your student loan servicer may give you a forbearance on the spot, but if your situation is not temporary, it may be best to enroll in an Income Driven Repayment Plan.

How do I get out of default?

There are two primary ways to get out of default.

  • Rehabilitation. Make nine monthly payments in full and on time over a ten month period. You must call your loan servicer to start this process.
  • Consolidation. You get a new loan to pay off your defaulted loan, which cures the default.  You will then be required to make payments according to the terms of your new loan. You can apply for consolidation online with your FSA ID through the Department of Education’s website.  Be careful, consolidation may result in the loss of certain benefits available to you prior to default.

Caution: You can only rehabilitate your loans one time.

Get help if your loan is in default to make sure you select the option that is best for you.

Between rehabilitation and consolidation, is one better than the other?

Not necessarily, but it will depend on your specific situation.

  • Consolidation may be faster and can be done online. This may be the best option for someone who needs to get federal student aid to finish their education. You cannot get federal financial aid if your federal student loans are in default.
  • Rehabilitation removes the default annotation on your credit report, but it does not remove the delinquencies that led up to the default. This can be an advantage since a consolidation will not remove the delinquencies or the default annotation.  If you are in the process of getting a mortgage (or other type of loan), this may be a better option.

Caution: The information above is for federal student loans only.  If you have private student loans, you should get advice before taking further action.  Review our “Managing Private Student Debt” section, or call us for more information.

What’s next?

Communicate with your servicer before you default.  Enrolling in an Income Driven Repayment plan may be the best short- and  long-term solution.   If you have defaulted, get help.  You will need a plan to get out and stay out of default.


Don’t ignore your student loans. There are many repayment options available.  If you have no income because you don’t have a job, your monthly payment can be as low as $0.  Enrolling in a repayment plan can prevent you from defaulting and negatively impacting your credit.