Dealing with Student Loan Default

on November 16, 2016

If you fail to repay your student loans, you will have to deal with the consequences of student loan default. But, these tips will help you get out of default and back on track.

Borrowers who are struggling financially should check the status of their federal student loans with the National Student Loan Data System (NSLDS). Information is also available through This will indicate whether their loans are delinquent or in default. Borrowers can also visit to obtain a free copy of their credit reports from the three major credit bureaus, TransUnion, Experian and Equifax, once a year. Both federal and private student loans are reported to each of the major credit bureaus.

If your student loans are in default or at risk of default, talk to the lender. Don’t let your fear of the lender stop you from dealing with your debt. Calling the lender is not as embarrassing as you might think. Tell the lender about your situation and ask them what options are available to you.

If you think the default is in error, contact the lender and provide documentation that you qualify for a deferment or forbearance. If payments are missing, ask for a copy of your payment history and compare it with cancelled checks or bank records.

Generally, borrowers in default have three main options for restoring their federal student loans to a current status: rehabilitation, refinance (consolidation) and repayment.

If you are receiving too many telephone calls and letters, you can exercise your rights under the Fair Debt Collection Practices Act (FDCPA) to ask the collection agency to stop contacting you. This will stop most, but not all, of the telephone calls and letters. The lender may still contact you to tell you about specific actions the lender is taking, such as filing a lawsuit against you or garnishing your wages.

Do not ignore letters from your lenders, as they may contain notices of actions the lender is taking to collect your debt. For example, if you are sued and do not show up in court, you will lose by default.

If you are sued, demand proof in court that the debt is owing. Some lender records are so disorganized that they cannot provide proof of the debt. If the lender cannot provide a copy of the signed promissory note or proof that you received or benefited from the money from the loan, the lawsuit might be dismissed.



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