Consolidate Student Loan Default

Getting out of student loan default is more than just a matter of paying what you owe. If you’re in default, you’ll have to follow a series of steps before your loan is considered current again. These include contacting your loan servicer, requesting forbearance or deferment, and making payments on time. However, if none of those options work for you, it might be time to consolidate your loans. This can make it easier for you—and make it less likely that something will go wrong in the future.

Consolidate Student Loan Default

1 Step 1: Contact your loan servicer

If you have federal student loans, the first step is to contact your loan servicer and let them know that you want to consolidate your loans. Tell the representative that you would like their help in consolidating all of your federal student loans into one new loan at a lower interest rate.

If they ask why, explain that it will save money over time and reduce the number of monthly payments due every month. The representative will likely ask some additional questions as well as provide information about what they need from you in order to process this request.

2 Step 2: Request a forbearance or deferment

  • If you’re having trouble making your monthly payments, you can request a forbearance or deferment from your student loan servicer. However, these are not the same thing! A forbearance is a temporary postponement of payment—usually for up to 12 months—upon which interest will continue to accrue and your balance will continue to increase. A deferment refers to a postponement of payment of your loan for up to three years, usually because of economic hardship (you work at least half-time in certain public service jobs).

In other words: forbearances last longer and allow more interest accrual while the borrower is in school; however, they do not count toward any type of forgiveness program that might reduce the amount owed overall. Deferments typically offer relief from making payments but do not stop accumulating interest until after graduation date or when one ceases eligibility criteria (e.g., ceasing employment).

3 Step 3: Renew your request every six months

To stay on the path toward consolidation, you’ll need to renew your paperwork every six months. This will ensure that your payment has been processed and that you’re still eligible for an income-driven repayment plan.

If you don’t renew your paperwork within six months, federal student loan servicer Navient can automatically start charging you late fees of up to $250 per month (and more than $2,000 over the life of the loan).

4 Step 4: Consider switching to another repayment plan

If you’re eligible for a repayment plan, it’s worth checking out. These plans typically offer lower monthly payments than standard repayment. There are six options to choose from:

  • Graduated repayment plan: These plans will have low initial payments and higher payments later on as your income increases; this is ideal if you’re new to the workforce and expect an increase in salary soon.
  • Consolidation loan repayment plan: This type of repayment plan allows borrowers with multiple federal loans to combine them into one payment based on their total amount owed (the same as the standard 10-year repayment plan). It’s an option if you have a hard time managing multiple debts or if having one large bill will make things easier for you financially.
  • Extended repayment plan: This type can be beneficial if income isn’t expected to rise substantially in the next few years—it extends the term of your loan by 20 years, making it payable over 30 years instead of 10 (or 25 instead of 20). If this sounds like something that would work well for your situation, consider applying for this option; however, keep in mind that some lenders charge interest rates higher than 12% during these extended periods because they assume that borrowers won’t be able pay off their debt within a reasonable timeframe.

5 Step 5: Pay as much as you can

Your final step is to set aside a certain amount of money every month to pay on your student loans. If you can, try to pay as much as possible without hurting your family or credit score. If there are other financial goals that are more important than paying off student loans right now, put some money toward those instead.

For example, if you have a car loan with high monthly payments and need to save up for a down payment on another vehicle, it may be worth it for now just to make minimum payments on both loans each month so that within three years or so (the time frame in which most people decide whether or not they can afford a home), you’ll have saved enough money for both purposes.

6 Step 6: Consolidate your loans

Consolidating federal student loans allows you to combine multiple loans into one loan with a single monthly payment. It can make payments easier to manage, lower your monthly payment and help you get a lower interest rate. Consolidation may also allow you to extend the repayment term of some or all of your loans, which can lower payments by extending the amount of time that it takes for the loan to be paid off.

The main advantage of consolidating is that it gives borrowers greater flexibility in choosing repayment plans and loan servicers. This can benefit those who are struggling financially or have fallen behind on their payments because they don’t have enough income to cover them all at once. Additionally, borrowers who have high credit scores may be able to refinance into a cheaper private student loan with better terms than federal ones provide

7 Student loan default can have some serious consequences. Make sure you know how to get out of it.

If you’re behind on your student loans, the consequences can be serious. In addition to defaulting on the loan, which will mean your credit score will take a hit and you may have trouble getting approved for other types of loans in the future, other legal actions may be taken against you.

Your employer may garnish your wages if they receive a court order from your lender instructing them to do so. This can easily occur during tax season when employers receive tax refund seizures from creditors who have obtained judgments against delinquent borrowers. Additionally, if you are sued by your lender for nonpayment of debt, that judgment could lead to wage garnishment or even fines and jail time if it’s not paid off within a certain amount of time (this varies depending on where in America you live).

If one or more of these things has happened and keeping up with payments seems impossible at this point, there is still hope! You may be able to get out from under these penalties by consolidating federal student loans into one manageable monthly payment plan—or switching current ones over—and working with an expert financial advisor who understands all about defaulted debt and how best to handle it before any further damage occurs.


Student loan default is a serious issue, and it can have some serious consequences. If you find yourself unable to pay your loans on time, there are several options available to help you get back on track. Contacting your loan servicer is the first step in resolving this problem.

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