Student loan in default
U.S. Department of Education

Student loan in default

I have a student loan in default. What are my options?

If you default on your student loan, it means you failed to make your loan payments as scheduled.  Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of defaulting on your student loans:

  • National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house.
  • You would be ineligible for additional federal student aid if you decided to return to school.
  • Loan payments can be deducted from your paycheck.
  • State and federal income tax refunds can be withheld and applied toward the amount you owe.
  • You will have to pay late fees and collection costs on top of what you already owe.
  • The Department may take legal action to force you to repay the loan.

Obviously, you don’t want to let your loan go into default.  However, should this happen, find out what options are available.  Click on this link to our Guide for Defaulted Borrowers to find comprehensive information developed by the Department’s Federal Student Aid Collections section. 

Student loan borrowers in default now have more options than ever before to repay student loans. The U.S. Department of Education's (Department) Default Resolution Group is committed to assisting you by making debt repayment a simple process. Contact them at 1-800-621-3115.


Topic Information
  • Topic #: 28022-554
  • Date Created: 12/31/2012
  • Last Modified Since: 09/14/2016
  • Viewed: 36663

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