My student loan is in default. What are my options?

The usual options to get a student loan out of default are consolidation, rehabilitation, or repayment.  As a North Carolina student loan lawyer, I help people from anywhere in North Carolina cure the default status of their student loans.  By doing so, wage garnishments are halted.  In addition, student loan borrowers struggling with payments can begin receiving their tax refunds again.  Lastly, getting a student loan out of default ends the negative reporting for that debt to the credit bureaus.  There are three ways to get your federal student loans out of default.

Restore credit, end wage garnishments, and receive tax refunds again.

Restore credit, end wage garnishments, and receive tax refunds again.

Consolidation.  A consolidation loan through the federal government pays off the defaulted student loan, and provides a new loan through the William D. Ford Federal Direct Loan Program with a single payment and a fixed interest rate.  Moreover, consolidating Federal Family Education Loans to the Direct Loan Program makes those loans eligible for payment options based on the borrower’s income.  This makes the new payment affordable (as low as $0/month), and approval for the ‘refinance’ loan is not based on credit worthiness.

Rehabilitation.  A student loan in default can also be cured when a borrower agrees to make 9 payments within 10 months to rehabilitate their student loan.  The payment is agreed upon by the lender and must be “reasonable and affordable.”  If your wages are currently being garnished, this may be the best option to become eligible for a consolidation.

Loan Repayment.  This one seems obvious, but the other way to get a loan out of default is to pay it off.  I do not recommend this option frequently because clients who have their student loans in default generally are not able to afford a lump sum payment.

Getting a student loan out of default is just the first step in creating a solid financial plan to deal with your student loan debt.  If you are struggling with a burdensome monthly student loan payment, and live anywhere in North Carolina, I would be pleased to speak with you during a initial telephone student loan consultationThe appointment costs $150 and includes a 30 minute telephone consultation and a detailed student loan analysis by email.