How to Recover from Student Loan Default

Student loan default can be a challenging situation to navigate. It can negatively impact your credit score, making it difficult to secure loans or credit cards in the future. However, there are steps you can take to recover from student loan default and regain financial stability.

How to Recover from Student Loan Default

In this comprehensive guide, we will walk you through the process of recovering from student loan default, step by step.

Before diving into the recovery process, it’s essential to understand what student loan default is. A student loan is considered in default when you fail to make payments for a certain period, typically 270 days for federal loans. Once your loan goes into default, the entire balance becomes due immediately, and you may face legal action from the loan servicer.

Consequences of Student Loan Default

Defaulting on your student loans can have severe consequences, including:

  • Credit Score Damage: Defaulting can significantly lower your credit score, making it challenging to borrow money in the future.
  • Collection Activities: You may face aggressive collection actions from the loan servicer, including wage garnishment and tax refund offsets.
  • Legal Actions: In some cases, lenders may take legal action against you to recover the outstanding balance.

Steps to Recover from Student Loan Default

Recovering from student loan default requires proactive steps and a commitment to resolving the debt. Here are the steps you can take to recover:

Step 1: Contact Your Loan Servicer

The first step in recovering from student loan default is to contact your loan servicer. They can provide you with information about your outstanding balance, repayment options, and potential solutions to get out of default.

Step 2: Evaluate Repayment Options

Once you’ve contacted your loan servicer, evaluate your repayment options. Federal student loans offer several repayment plans, including income-driven repayment plans that base your monthly payments on your income.

Step 3: Consider Loan Rehabilitation

Loan rehabilitation is another option to get out of default. This process involves making nine consecutive monthly payments agreed upon with your loan servicer. Once you complete the rehabilitation, your loan will be transferred to a new servicer, and the default status will be removed from your credit report.

Step 4: Consolidate Your Loans

Loan consolidation is another option to recover from default. Consolidation involves combining multiple federal student loans into a single loan with a fixed interest rate. This can simplify your repayment process and potentially lower your monthly payments.

Step 5: Stay Committed to Repayment

Once you’ve chosen a repayment option and taken steps to get out of default, it’s crucial to stay committed to your repayment plan. Make your payments on time and communicate with your loan servicer if you encounter any financial difficulties.

Tips to Avoid Future Default

To avoid future default, consider the following tips:

  • Create a Budget: Create a monthly budget to manage your expenses and ensure you can afford your student loan payments.
  • Set Up Auto-Pay: Setting up automatic payments can help ensure you never miss a payment.
  • Stay Informed: Keep yourself informed about your repayment options and any changes to your loan terms.


Recovering from student loan default may seem daunting, but with proactive steps and commitment, it’s possible to regain financial stability. By understanding the consequences of default, evaluating repayment options, and staying committed to repayment, you can successfully recover from student loan default and move towards a debt-free future.

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