Aftergrad Ledger / Student loan guide

Federal student loan default options

If a federal student loan is in default, start by checking each loan and confirming who holds it. This guide compares available ways to resolve default, their timing and trade-offs, and repayment plan limits after default. It lays out choices without selecting one for you.

Federal Student Aid guidance checked November 6, 2026.

Federal student loans generally enter default after at least 270 days without a scheduled payment. The options below are general descriptions: eligibility, collections, and payment terms can depend on the loan and its history. The current Federal Student Aid default and collections FAQ is the main source for the processes summarized here.

Confirm the status of every loan first.

A dashboard warning is a useful starting point, but check the details loan by loan. Federal Student Aid describes the following status-check steps in its default FAQ:

Sign in to StudentAid.gov. Open your Dashboard and review the “My Aid” or “My Loans” area. Select each loan to check its type, current status, balance, and loan or disbursement dates. A red dashboard warning can indicate default, but verify the individual loan details.
Read notices and confirm your mailing information. Check letters and other account communications for notice dates and next steps. Make sure your address in StudentAid.gov is current so you do not miss a mailed notice.
Identify the holder for each defaulted loan. For a loan held by the U.S. Department of Education, the Default Resolution Group (DRG) is the default-loan contact. A commercially held FFEL loan is assigned to a guaranty agency; StudentAid.gov lists the assigned holder under “My Loan Servicers.”
Use the right account for default-loan details. For loans transferred to DRG, MyEdDebt.ed.gov is the official default-loan account. It uses separate account credentials from StudentAid.gov; your StudentAid.gov username and password do not work there.

The current Federal Student Aid FAQ lists DRG at 1-800-621-3115, Monday through Friday, 8 a.m.–10 p.m. Eastern and Saturday, 8 a.m.–6 p.m. Eastern. If the loan is a commercially held FFEL loan, use the assigned guaranty agency instead. Check the official contact instructions before relying on a number or deadline.

Collections and credit reporting are possible, not automatic in every case.

If a loan remains unresolved for more than 360 days, involuntary collection may begin. Depending on the loan and notices sent, possible consequences include collection costs, administrative wage garnishment of up to 15% of disposable pay, and Treasury offset of a federal tax refund or certain federal benefits. Federal Student Aid says Treasury sends a written notice to the last-known address before an offset, with the notice stating that offset and negative credit reporting are scheduled to begin in 65 days. Check any notice you receive for its actual dates. See the current default and collections FAQ for the collection and notice details.

A default entry and earlier late-payment entries are different items. Federal Student Aid says that if no action is taken within 65 days after loans are placed in default, DRG may report the default in addition to reporting by the prior servicer; a loan can therefore appear more than once. Late payments reported before default may remain even if the default record is later removed. The default FAQ explains what consolidation and rehabilitation do to those records.

A Treasury-offset notice is sent to the last-known mailing address before the offset. For a wage-garnishment notice, Federal Student Aid lists a hearing request postmarked no later than 30 days from the date the notice was sent; for a Treasury offset dispute, it lists 65 days from receipt of the notice. Use the instructions and dates on your own notice. These hearing routes do not themselves resolve the default.

Compare the ways the government lists for resolving default.

Federal Student Aid’s current default FAQ lists consolidation, rehabilitation, a repayment agreement, and paying in full. The comparison below covers general thresholds and stated trade-offs. It is not a ranking; ask the holder to confirm which options apply to each loan.

Option 01

Direct Loan consolidation

General threshold: More than 270 days past due.
What you do and timing: Apply online for a Direct Consolidation Loan. Federal Student Aid says the online application is faster than rehabilitation; it does not promise a specific completion date. Use the current Direct Consolidation Loan application.
Costs and collections: Interest capitalization and collection costs can increase the debt. Confirm the payoff and new balance with Federal Student Aid before applying.
Credit history: Consolidation does not erase the default record. The default and late-payment records may remain for up to 10 years.
Who to contact: Federal Student Aid through the online application or the holder identified in your account. Review the official consolidation comparison.

Option 02

Nine-payment rehabilitation agreement

General threshold: More than 360 days past due.
What you do and timing: Sign a written agreement and make nine voluntary, on-time payments. The Rehabilitation FAQ says Direct and FFEL borrowers make nine payments during 10 consecutive months, while Perkins borrowers make nine consecutive payments. The newer Get Out of Default page says Direct and FFEL timing can be 9 or 10 consecutive months depending on loan type. Because the official pages state both formulations, ask the holder for the schedule that will appear in your written agreement. The process takes several months and may require mailed or faxed paperwork and income documents.
Payment and costs: The Rehabilitation FAQ states a standard amount of 15% of annual discretionary income divided by 12. Current Federal Student Aid guidance also describes a holder-set amount of 10% or 15% depending on when loans were received. If the proposed amount is not affordable, documented income and expenses may support a lower alternative. Get the actual amount from DRG or the assigned guaranty agency. FSA lists avoiding collection fees as a benefit; ask whether any charges already on the account remain. See the rehabilitation FAQ and current default guidance.
Result and credit history: After the ninth payment, the default status is removed and ED requests removal of the default record. Collections stop, federal student-aid eligibility and prior loan benefits return, and the loan transfers to another servicer. Earlier late-payment entries can remain.
Use limit and contact: As of November 6, 2026, rehabilitation is generally available once per loan. Beginning July 1, 2027, Federal Student Aid says a borrower may rehabilitate each loan twice over its lifetime. Contact DRG, or the assigned guaranty agency for a commercially held FFEL loan. See the Rehabilitation FAQ and current Get Out of Default guidance.

Option 03

Repayment agreement

General threshold: More than 360 days past due.
What you do and timing: Agree with the holder to a repayment schedule and make the first payment by the applicable deadline. To avoid Treasury offset, FSA says the first payment must be made within 65 days of the date the notice was sent. To avoid wage garnishment, it must be made within 30 days of the date that notice was sent. Both clocks start from the notice’s sent date, not the day you read it. The process can take several months and may require paper, fax, or mailed forms.
Costs and collections: FSA lists avoiding collection fees and meeting the payment deadlines above as benefits. The protections described for offset and garnishment have separate deadlines; confirm your agreement and payment posting with the holder.
Credit history: The default record remains on credit history under the current FSA comparison.
Who to contact: Contact DRG for a loan held by ED, or the assigned guaranty agency for a commercially held FFEL loan. Read the current Federal Student Aid FAQ and keep the mailed agreement because the full agreement may not appear online.

Option 04

Pay the loan in full

General threshold: More than 270 days past due.
What you do and timing: Pay the full amount quoted by the holder. Federal Student Aid describes this as an immediate resolution, once the payoff is completed. Ask for the exact payoff amount and how to submit it before sending money.
Costs and collections: The payoff may include amounts already added to the loan. Confirm the total with DRG or the guaranty agency. Federal Student Aid notes that paying in full may be unrealistic for many borrowers; it is included as an official option, not a recommendation.
Credit history: The default FAQ does not state a separate credit-record removal timeline for paying in full. Ask the holder how it will report the resolved loan and when.
Who to contact: DRG or the assigned guaranty agency. The Federal Student Aid default FAQ lists this option and contact route.

Income-driven repayment comes after an eligible exit from default.

A loan in default cannot be repaid through IBR, ICR, or PAYE. After an eligible resolution, Federal Student Aid says a borrower may regain the ability to enroll in an available income-driven repayment (IDR) plan. Enrollment is not automatic: you still need to apply, and the loan type, first-disbursement dates, and other plan requirements determine eligibility. Review the current Federal Student Aid IDR FAQ before relying on any plan description below.

July 1, 2026 transition: the Repayment Assistance Plan (RAP) is an IDR option for eligible Direct Loans first disbursed on or after this date; the current Federal Student Aid chart also lists RAP for many eligible Direct Loans disbursed earlier. Parent PLUS and FFEL loans are not eligible for RAP. IBR is generally limited to eligible older Direct and FFEL loan histories, while ICR and PAYE are generally limited to qualifying Direct loan histories first disbursed before July 1, 2026; both plans are scheduled to end no later than July 1, 2028. A later loan or consolidation can change available choices. Mixed histories and loan-type exceptions matter, so check the official Federal Student Aid plan comparison and Edfinancial comparison chart.

Income-Based Repayment (IBR)

IBR requires high debt relative to income, and eligible loan types and dates matter. Depending on when the first loans were received, the payment is 10% or 15% of discretionary income, capped at the 10-year Standard amount. For this calculation, discretionary income is AGI minus 150% of the federal poverty guideline for family size and state. Income and family size are updated each year. A spouse’s income and debt count only with a joint tax return. Any remaining balance may be forgiven after 20 or 25 years, depending on the first loan date; tax may apply. See the current IBR rules from Edfinancial and Federal Student Aid’s IDR eligibility chart.

Income-Contingent Repayment (ICR)

ICR is for eligible Direct Loan borrowers, subject to current loan-type and date limits. Discretionary income is AGI minus 100% of the federal poverty guideline for family size and state. The payment is the lesser of 20% of discretionary income or an income-adjusted fixed payment over 12 years. The amount is recalculated each year using income, family size, and total Direct Loan debt. A spouse’s income or debt is counted if you file jointly or repay Direct Loans jointly. A remaining balance may be forgiven after 25 years, and tax may apply. ICR is scheduled to end no later than July 1, 2028. See the current ICR rules from Edfinancial and Federal Student Aid’s IDR FAQ.

Pay As You Earn (PAYE)

PAYE requires high debt relative to income and qualifying Direct Loan history: generally, a new borrower on or after October 1, 2007, with a Direct Loan disbursement on or after October 1, 2011. Current eligibility is limited to qualifying older loan histories and loan types. The payment is 10% of discretionary income, capped at the 10-year Standard amount; discretionary income is AGI minus 150% of the federal poverty guideline for family size and state. Income and family size are updated annually, and a spouse’s income and debt count only with a joint tax return. A remaining balance may be forgiven after 20 years, and tax may apply. PAYE is scheduled to end no later than July 1, 2028. See the current PAYE rules from Edfinancial and Federal Student Aid’s IDR eligibility chart.

These plan summaries preserve general formulas; they are not payment estimates or confirmation that a particular loan qualifies. Federal Student Aid’s current plan comparison and the account holder control for individual eligibility.

A practical checklist for your next conversation.

Sign in to StudentAid.gov and list each defaulted loan’s type, status, balance, and dates.
Read the notices, note when each was sent, and update your mailing information.
Confirm who holds each loan: DRG for ED-held defaulted loans or the assigned guaranty agency for commercially held FFEL loans.
Ask the holder which resolution options apply and request the payment amount, deadline, paperwork, collection-fee treatment, and credit-reporting result in writing.
Compare the written terms and any IDR choices that may be available after default is resolved. Keep copies and verify the account status after each step.

If a notice has a deadline, use the date and instructions on that notice. For the status, balance, and agreement that applies to your loans, confirm directly with StudentAid.gov, DRG, or your assigned guaranty agency.

Official sources

This guide reflects the official pages linked above as checked November 6, 2026. Policies and individual account terms can change. The supplied earlier research brief did not establish 2024 policy-change facts, a credit-score prerequisite, or deferment and forbearance routes out of default. This guide does not infer that those gaps prove anything; it uses current dated Federal Student Aid guidance and does not present deferment or forbearance as default-resolution options.