How to Fix a Student Loan Default

You probably attended college to get an education and obtain your dream job. However, many people forget the reality of a college education: It usually comes with a large amount of student loan debt. It’s tempting to ignore that debt and hope it just disappears, but unfortunately that is not the case.

When a person does not pay their student loans back, their loan is considered to be a defaulted student loan. Defaulted student loans can cause a number of repercussions that can have a negative impact on your life.

First, your loan holder can actually garnish your wages and force you to repay it. By defaulting on a loan, you are also likely to have bad credit and experience a high volume of collection agency letters and phone calls.

You should rehabilitate a defaulted loan for many reasons. Firstly, your loan will no longer be considered to be in a default status. Secondly, the default status that’s reported by your loan to the credit bureaus will be deleted. Thirdly, you will be able to defer your payments, or file for forbearance. Finally, if your wages had been being garnished, this stops and your income tax refund will be released.

But how do you go about rehabilitating your student loan default? According to the federal student loan website, to rehabilitate most of your defaulted student loans, you must make at least nine payments of an agreed amount within twenty days of their monthly due dates over a ten month period.

It’s important to remember that payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine payments toward rehabilitation. Once you have made the required payments, your loan will no longer be considered a defaulted student loan.

After you defaulted on a student loan, you will have to work hard to help student loan default leave your history. Paying on time is crucial to fixing your credit report. An easy way to have this happen is to have automated payments taken out of your banking account each month to ensure your payment is timely. Just remember to always have enough money in your banking account to cover the monthly payment.