How to Recover from Student Loan Default

If you’ve defaulted on your student loans, you have several options to help you recover from it. Here’s what student loan default means for you right now and how to get out of it.

Key Takeaways

  • For federal student loans, the primary ways to recover from default are the Fresh Start program, student loan rehabilitation, or a direct consolidation loan. For private student loans, your lender may offer default rehabilitation programs.
  • To determine if your student loans are in default, check their status by either logging into with your Federal Student Aid (FSA) ID or looking at your credit report.
  • Defaulting on your student loans can reduce your credit score, limit your borrowing opportunities, make the full balance of your loans due, and potentially result in wage garnishment.

How to Recover from Student Loan Default

Defaulting on your student loans can be detrimental, but you can come back from it. There are a few ways that you can recover from student loan default:

Fresh Start Program

Fresh Start is a federal program that’s designed to get your loans back on track.

You can contact the U.S. Department of Education by going to and logging in. You’ll see an option for Fresh Start, and this is the easiest route for enrolling in the program. You can also call them at 1-800-621-3115. It’s a good idea to have your latest income information on hand, which comes from your most recent tax filing, but it’s not required.

On the call, you’ll discuss your interest in the Fresh Start program and getting out of student loan default. You’ll then get enrolled in an income-driven repayment (IDR) plan so your payments match up to what you can reasonably afford to pay.

Once enrolled, your loans will get moved to a Department of Education loan servicer (if they’re in default, your loans may currently be with a debt collector or a similar agency). Your loan status changes from “default” to “in repayment,” and the “default” status will also be removed from your credit report.

Fresh Start gives you access to all federal financial aid, including borrowing student loans in the future. You’ll also gain access to federal deferment, forbearance, and forgiveness plans.

Not all loans are eligible for Fresh Start, so be sure to check if you’re eligible before trying to enroll in the program.


Federal student loan rehabilitation is when you make a series of on-time payments for a set period of time. Your monthly payment is based on your income, and rehabilitation is complete when you make nine monthly payments over the course of 10 months. Specifically, you must agree in writing to make nine voluntary, reasonable and affordable monthly payments, as determined by the servicer, within 20 days of the due date and make all nine payments within 10 consecutive months.

You can only rehabilitate your defaulted loans once. If you went through the Fresh Start program and defaulted on your loans again, you can still enroll in rehabilitation. Log in to your account, then select “View Details” under “My Aid.” From there, you’ll be able to see who your loan servicer is and can contact them about enrolling in rehabilitation.


You can consolidate your student loans whether you’re in default or not by taking out a direct consolidation loan with the Department of Education. This loan doesn’t have a credit check or an income requirement.

Consolidating your loans is when you combine all of your federal student loans into one loan. Your new interest rate is the weighted average of your current interest rates, rounded up to the nearest one-eighth percent. For consolidated defaulted loans, you’ll need to agree to repay your new direct consolidation loan under an income-driven repayment (IDR) plan or make three consecutive full monthly payments on the defaulted loan before you consolidate.

Not all loans are eligible for consolidation, so make sure you know which ones qualify before applying for a direct consolidation loan.

Keep in mind that there is no one-size-fits-all approach—if one doesn’t work for you, explore other options before settling on the one that’s best for your situation.

Recovering from Private Student Loan Default

Private student loans don’t have the same protections, benefits, or programs as federal student loans. If you’re looking to get out of default from a private student loan lender, you may have more work to do.

Like federal student loans, you can see who your loan servicer is by checking Even if your loan servicer has sold your loan to a collection agency, they should be able to direct you to the debt collector.

Contact your lender to review your repayment options. Some lenders might offer default rehabilitation programs, but those terms can vary by lender. You can also explore credit counseling to help you build out a payment plan based on your income. You can check the U.S. Department of Justice for a list of approved credit counseling agencies to avoid getting scammed by fraudsters.

How to Know If Your Student Loans Are in Default

You can check your student loan status by logging into with your Federal Student Aid (FSA) ID. When you select your loan, you can see if the status is listed as default. 

You can also check to see your student loan status by checking your credit report. You can pull your credit reports from the three major credit bureaus—Equifax, Experian, and TransUnion—via There will be a section that details negative marks on your report, and if your student loans are in default, it will be in this section.

Consequences of Student Loan Default

Having your student loans in default can have detrimental impacts on your financial future, including:

  • Your credit history. Your payment history is the most important part of your FICO credit score, making up 35% of it. Being late on even one payment can cause your credit score to drop. Having your loans in default could mean your score plummets.
  • Your borrowing opportunities. A low credit score impacts everything you need when it comes to borrowing, whether you’re trying to buy a home and secure a mortgage, take out an auto loan, or even get a credit card. Your credit score is tied to everything related to borrowing money, so if you ever need to borrow in the future, having student loans in default could hurt your chances. Even then, if you are accepted for lines of credit or loans despite your reduced credit score, your interest rates will be much higher with poor or fair credit compared to borrowers with good or excellent credit.
  • Your repayment plan. If you’ve fallen so far behind on payments that your loans have been accelerated, that means your full balance is immediately due. Depending on how much you owe, that could significantly hurt your finances if you need to pay off your student loans in one lump sum rather than several smaller payments over time. 
  • Your income. In some states, you can face wage garnishment (i.e., having a portion of your paycheck taken out) to pay for your defaulted student loans. Student loan default could also result in a potential loss in federal retirement income benefits like Social Security.

How do I recover from defaulting on student loans?

You have several options to recover from defaulting on your student loans. Federal student loans can be rehabilitated or consolidated, or you can take advantage of the Fresh Start program. Private student loans offer fewer options—your lender may have a default rehabilitation program, but you’ll have to contact them to be certain, and terms will vary by state.

Do defaulted student loans go away after 7 years?

Defaulted student loans generally won’t go away on their own. Late payments, meanwhile, will typically remain on your credit report for seven years.

What is the average student loan debt?

As of the first quarter of 2023, the average student loan debt is $37,337.90 per person.

The Bottom Line

Student loan default can be hurtful to many borrowers who haven’t been able to make payments and don’t feel like there’s any way to get out. But for federal student loan borrowers, you have a few different ways to recover from default. Review your options and stay diligent with payments so that you avoid default again.

Article Sources
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  2. Federal Student Aid. “Don’t Get Discouraged If You’re in Default on Your Federal Student Loan.

  3. U.S. Department of Education. “Options for Getting Out of Default.”

  4. Federal Student Aid. “Consolidating Student Loans.”

  5. Federal Student Aid. “When It Comes to Paying for College, Career School, or Graduate School, Federal Student Loans Can Offer Several Advantages Over Private Student Loans.

  6. myFICO. “What Is Payment History?

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  8. Federal Student Aid. “Collections on Defaulted Loans.”

  9. Federal Student Aid. “Federal Student Loan Portfolio,” download “Federal Student Aid Portfolio Summary (Excel).”

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