The payments must be voluntary

The payments must be voluntary, consecutive, and on-time to count. If you choose this option, you are eligible to repay your Direct Consolidation Loan under any repayment plan you want.

After your defaulted loan is consolidated, you are again eligible for benefits such as deferment, forbearance, and loan forgiveness. You will also regain your ability to secure further federal student aid.

Note: The loan consolidation method does not remove the record of Big Boss votethe defaulted loan from your credit history.

To rehabilitate a Direct or FFEL

To rehabilitate a Direct or FFEL Loan you must, agree in writing to make nine payments. The payments must not be more than 20 days after the due date, and be made within a period of 10 consecutive months. Under your loan rehabilitation agreement, your monthly payment will generally be 15% of your discretionary income (the payment could be as low as $5).

Note: Involuntary payments (such as wage garnishment) do not count toward your nine required payments. Also, involuntary payments could continue to be withheld until your loan is actually out of default.

If you have a federal student loan that has entered into default status

If you have a federal student loan that has entered into default status, there are several ways you can get your loan out of default. Depending on how quickly you act and which option you choose, you may be able to avoid some or most of the negative consequences of default. Important: Ignoring your defaulted loan is never a good option.

Note: The following options apply only to federal student loans. If you have a private student loan, contact your lender or collection agency to see what your available options are.

The first time you receive notification that your loan is delinquent,

The first time you receive notification that your loan is delinquent, be sure to contact your loan servicer or lender. Whether you just forgot to pay, or there was an error, choosing to be proactive is the best way to stay out of default. Your servicer or lender will usually work with you to keep your loan out of default as it costs them money if your loan does go into default.

For federal student loans, there are several Income-Driven Repayment Plans that may make your monthly payments affordable. There are also deferment and forbearance options available in certain circumstances. Your loan servicer can help you decide which you qualify for and what will be best for your situation. Remember: If your loan goes into default, you can no longer take advantage of these options.

The following is a list of the consequences of defaulting on your student loan

The following is a list of the consequences of defaulting on your student loan:
The entire balance of your loan and any interest is considered to be due immediately.
You lose your eligibility for deferment, forbearance, and Income-Driven Repayment Plans.
You are no longer eligible for additional federal student aid.
Your loan account is taken from your loan servicer or lender and assigned to a collection agency.
The Credit Bureaus will be notified and your credit score will take a big hit.
Your federal and state tax refunds may be withheld.
Your total student loan debt will increase due to fees charged during the collection process.
Your wages may be garnished (this means that the government can direct your employer to withhold a certain amount from your paycheck).
The agency that holds your loan can take legal action against you (this may result in your inability to buy or sell assets such as real