Helping Borrowers With Trusted Resources
SDCC is focused on how the student debt crisis impacts individual borrowers. We provide tools, repayment information, clinics, and other resources to help. For help with your federal student loans, visit any of the links here or browse the frequently asked questions below.
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Income-Driven Repayment (IDR) Plans: https://studentaid.gov/manage-loans/repayment/plans/income-driven
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Latest Updates on the SAVE Plan: https://studentaid.gov/announcements-events/save-plan
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What is Default and Delinquency? https://studentaid.gov/manage-loans/default
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Getting out of Default & Delinquency (if you’re behind on your payments): https://studentaid.gov/manage-loans/default/get-out
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Public Service Loan Forgiveness (PSLF): https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service
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Total & Permanent Disability Discharge: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge
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Student Loan Consolidation: https://studentaid.gov/manage-loans/consolidation
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Student Loan Servicer Information: https://studentaid.gov/manage-loans/repayment/servicers
Consolidation is the process of converting a loan type or combining one or more loans into a new loan. While consolidation can have certain tradeoffs, a benefit may be that it turns multiple monthly student loan payments into one loan with a regular, fixed interest rate. Federal student loan consolidation is provided for free by your loan servicer. You can apply to consolidate your loans here.
**Consolidating your student loans could result in a loss of IDR and PSLF credits.
You are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment. The loans you consolidate must be in repayment or grace period. Typically, you cannot consolidate an existing consolidation loan unless you add another eligible loan in the consolidation. Under certain circumstances, you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.*
Additionally, if you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements (defined as three consecutive monthly payments) on the loan before you consolidate, or you must agree to repay your new Direct Consolidation Loan under any of these repayment plans:
Income-Based Repayment Plan
Pay As You Earn Repayment Plan
Revised Pay As You Earn Repayment Plan
Income-Contingent Repayment Plan.
If you want to consolidate a defaulted loan that is being collected through garnishment of your wages, or that is being collected in accordance with a court order after a judgment was obtained against you, you cannot consolidate the loan unless the wage garnishment order has been lifted or the judgment has been vacated.
Repayment begins within 60 days after the loan is disbursed (paid out). Your servicer will let you know when the first payment is due. If you have loans still in grace period, you can delay consolidation until the grace period is close to ending. With this, you won’t have to begin making payments on your new consolidated loan until close to the end of the grace period on your current loans.
The application can be done online, or you can print and mail a paper application. After submitting an electronic application or a physical copy, the consolidation servicer you selected will take the required steps to consolidate your eligible loans. For questions about your consolidation, your consolidation servicer will be your point of contact. Unless the applied loans are in a deferment, forbearance, or grace period, it’s important to continue making loan payments until your consolidation servicer tells you that they have been consolidated.
To ask consolidation questions before applying and for tech support while completing the Federal Direct Consolidation Loan Application, contact the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
After submitting a consolidation application, contact the servicer for your new Direct Consolidation Loan. For online applications, your consolidation servicer’s contact information is provided at the end of the online process. If you mailed a paper application, your consolidation servicer’s contact information was available downloading or printing the paper application.
Deferment is a temporary postponement of your loan payments. Deferment is available for specific circumstances such as economic hardship, military service, and unemployment. All deferments are available to Direct Loans, FFEL loans, and Perkins Loans. Most deferments are not an automatic process and you must apply for it.
Depending on what type of loan you have, the loan may or may not accrue during your deferment. Unpaid interest that accrued during the deferment period may be added to the principal balance of your loan. During deferment, you won’t have to make a payment, however, you also may not be making progress toward loan forgiveness or paying off your loan.
Cancer treatment, economic hardship, graduate fellowship, in-school, military and post-active duty, parent plus borrower, rehabilitation training, and unemployment deferment.
Click here to learn more about the different types of deferment and to apply.
A grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan.
The length of a grace period is typically six months, but it can vary depending on the type of loan you received. The promissory note you signed for your loan tells you the length of your grace period or you can ask your servicer.
Direct Subsidized and Direct Unsubsidized Loans have a six-month grace period.
Parent PLUS loans do not have a grace period. Graduate/professional students automatically receive a six month deferment after graduating, leaving school, or dropping below half-time enrollment. Parent borrowers who took loans to pay for their child’s education can request a six month deferment after a child graduates, leaves school, or drops below half-time enrollment.
For more information on grace periods for Federal Perkins Loans, contact the school where you received your loan.
If called to active military duty more than 30 days before your grace period ends, you will receive the full six-month grace period after returning from active duty service.
If you re-enroll in school before the grace period ends, you will receive a full six month grace period when you stop attending school or drop below half-time enrollment.
If loan consolidation occurs during a grace period, you forfeit the remainder of the grace period. Payments would start after a Direct Consolidation Loan is processed.
If you’re having trouble with payments you may be interested in a loan deferment or forbearance: With loan deferment you can temporarily stop making payments, while with loan forbearance you can stop or reduce your monthly payments for up to 12 months. Because loan interest can build up while in deferment or forbearance, you may want to look at other repayment plans first; like an income-driven repayment plan. Talk to your loan servicer to discuss the best option for you. **Note that under the Covid 19 Student Payment Pause, federal student loans don’t need to be repaid until after the pause ends.
If you’re in school at least half-time and should’ve got an in-school loan deferment: Contact your school’s registrar and get a record of all your dates of attendance; Contact each school you’ve attended since you got your loan, for complete documentation; Then ask your loan servicer for the last date of attendance they have on file for you, and if they have an incorrect date give them a copy of your complete attendance documentation.
If you were approved for deferment: Ask your loan servicer to confirm the start and end dates of your deferments on your loan account, and if the servicer has incorrect information, provide them documentation with correct information.
Your loan becomes delinquent the first day after you miss a student loan payment, which means that it is past due. Your loan will continue to be delinquent until your past due amount is paid or if you make other payment arrangements like deferment, forbearance, or changing your repayment plan.
If you are delinquent for over 90 days, your loan servicer will report the delinquency to credit reporting agencies. Continued delinquency risks your loan going into default. Loan delinquency can detrimentally affect your credit score which may make it harder to get a credit card, home, or car loan, and can increase your interest rates on any loans you receive. It is important to contact your loan servicer if you are having trouble making payments.
Default is a status that a loan is placed in if the borrower has failed to make a payment when due for the number of days allowed by the applicable regulations, or if the borrower violates other terms and conditions of the promissory note. Continued delinquency may result in your loan going into default.
The point when a loan is considered to be in default varies depending on the type of loan you received:
Direct Loans- After 270 days
FFEL loans- After 270 days
Perkins loans- Your loan holder can declare your loan to be in default if you don’t make your scheduled payments by the due date.
Loan default can impact your ability to borrow and your finances. Consequences include the following: Your entire unpaid loan balance and interest becomes immediately due; you can’t receive deferment or forbearance, and can’t choose a repayment plan; and you won’t be eligible for more federal student aid. Default will severely damage your credit score, and make any type of loan hard to get. Any tax refunds, federal benefits and wages may be garnished. Some schools can withhold your official transcript, but upon your request schools must give you an unofficial transcript. If your school is not giving you an unofficial transcript, report it to the Consumer Financial Protection Bureau (CFPB).
This section applies to defaulted student loans that are held by the U.S. Department of Education (ED); typically Direct, FFEL, and Federal Perkins loans. If your loan goes into default, the entire loan becomes immediately due, and the loan holder can garnish your wages, federal payments, and tax returns. Note that private collection agencies will no longer service ED held defaulted loans. To get out of default, you can reach out to the Department of Ed’s Default Resolution Group for free (800)-621-3115.
To collect payment on a defaulted loan, your loan holder can withhold up to 15% of your paycheck (after taxes). Wage garnishment will continue until your defaulted loan is fully paid or you get out of default. In garnishment, you have the right to a notice that explains ED’s intention to garnish your wages in 30 days, the nature and amount of your debt, a chance to inspect/copy your debt records, a right to object to garnishment, and to avoid garnishment by voluntary repayments. You can also enter into a written agreement with ED to get out of default. Lastly, your employer can’t fire you, refuse employment, or punish you because of your garnishment. Additionally you have the right to legal action against your employer, if workplace retaliation occurs.
You can have be given a hearing to present any objection you have to the existence, amount, or enforceability of your debt; any objection that wage garnishment would produce extreme financial hardship; or any objection stating that garnishment cannot be used because you’ve been employed for less than 12 months after previous unemployment. And you can have garnishment withheld by filing a timely hearing request, until the hearing is completed and a decision issued. If you decide to request a hearing for your garnishment specifically you should make a request in writing no later than 30 days from the garnishment notice. If you’re successful in disputing garnishment, your wages will not be garnished for one year. Contact ED’s Default Resolution Group or your loan servicer to get out of default.
When in default, the Department of Ed can withhold money from your government income tax refunds, Social Security payments, disability benefits, and other federal payments. These will be applied toward your defaulted student loan repayment. You will be mailed a notice and will begin 65 days after notification. This withholding will continue either until your debt is repaid or you get out of default. You have the right to request an account review to prevent withholdings. If the Social Security Administration determines you are “totally disabled” then your benefits won’t be taken. But retirement benefits can be withheld to pay your loan. For help on getting out of default and preventing withholdings, contact your loan holder or reach out to ED’s Default Resolution Group.
You can take your loans out of default through the Fresh Start Program.
Fresh Start is a one-time temporary program from the U.S. Department of Education (ED) that offers special benefits for borrowers with defaulted federal student loans.
Fresh Start automatically gives you some benefits, such as restoring access to federal student aid (loans and grants). But you need to act to claim the full benefits of Fresh Start and get out of default. Visit studentaid.gov/freshstart to learn how to sign up for free.
Fresh Start is a Biden Administration program that streamlines the process for borrowers to get out of default (with exceptions like school-held Perkins Loans or loans that went into default after 3/20/20). A few benefits are applied automatically to any eligible borrower. These benefits expire one year after the payment pause ends, unless you take additional steps (explained further down).
Access to Federal Student Aid
Stopped Collections
Eligibility for Other Government Loans
Restored Ability to Rehabilitate Loans
Loans classified as “current” to credit reporting agencies (rather than “in collections”)
To keep the benefits listed above and to get access to the benefits listed below, you must apply to Fresh Start.
Access to Income-Driven Repayment (IDR) Plans, which could lower your monthly payment to as low as $0/month
Access to Student Loan Forgiveness Programs, which could wipe out all or part of your student loan balance.
Access to Short-term Relief (Forbearance and Deferment)
Online—Go to myeddebt.ed.gov and log in to your account.
Phone—Call us at 1-800-621-3115 (TTY number is 1-877-825-9923).
Tip: Before calling, look up your income on your most recent federal tax return (line 11 of IRS Form 1040). But if you can’t find it or didn’t file taxes, don’t worry—you should still call.
What to expect on the phone: It will take about 10 minutes. A representative will ask for some information to find your record, then ask why you are calling (your answer: Fresh Start, to get out of default).
Mail—Write to P.O. Box 5609, Greenville, TX 75403. In your letter, include your name, social security number, date of birth, and the following: “I would like to use Fresh Start to bring my loans back into good standing.”
Another option for getting your loan out of default is loan rehabilitation. However, the Fresh Start program has more benefits and is much easier to enroll in. To start the loan rehabilitation process, you must contact your loan holder. If you’re not sure who your loan holder is, you can log in and view your loan servicer details to get your loan holder’s contact information.
What you need to do to rehabilitate your loan(s) depends on your loan type and who holds your loan. Loans in the William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program have different requirements from loans in the Federal Perkins Loan Program.
To rehabilitate a defaulted Direct Loan or FFEL Program loan, you must:
1) agree in writing to make nine voluntary, reasonable, and affordable monthly payments (as determined by your loan holder, although the nine payments are equal to 15 percent of your annual discretionary income, divided by 12.) within 20 days of the due date, and
2) make all nine payments during a period of 10 consecutive months.
When your loan is rehabilitated, the default status will be removed from your loan, and collection of payments through wage garnishment or Treasury offset will stop. You’ll regain eligibility for benefits that were available on the loan before you defaulted, such as deferment, forbearance, a choice of repayment plans, and loan forgiveness. And you’ll be eligible to receive federal student aid again. Also, the record of default on the rehabilitated loan will be removed from your credit history. However, your credit history will still show late payments that were reported by your loan holder before the loan went into default.
Step 1: Mail or Fax the U.S. Department of Education (ED) a copy of your latest tax return or tax transcript. You can apply for loan rehabilitation by: mailing or faxing ED a copy of your latest tax return or federal 1040 tax return; this will be used to calculate monthly payments. Mailing Information (Fax: 903-454-2243 Address: U.S. Department of Education Default Resolution Group P.O. Box 5609 Greenville, TX 75403-5609)
** If you live with your spouse but file taxes separately, also include your spouse’s tax returns. If your latest tax return is not an accurate representation of your current income or you haven't filed taxes in the last two years, send a Loan Rehabilitation Income and Expense form
Step 2: Sign and return the loan rehabilitation agreement as soon as possible. Within 10 business days of receiving your income information, ED will send you a loan rehabilitation agreement in the mail. This will include your calculated monthly payment, payment options, and terms of the agreement. After reviewing the form, promptly mail your signed agreement back to the outlets listed in step one.
Step 3: Complete rehabilitation by making on-time payments after the payment suspension ends. You need to make nine on-time monthly payments in order to complete loan rehabilitation. Note that during the COVID-19 emergency relief period, suspended payments count toward loan rehabilitation. After the Covid payment suspension ends, rehabilitation payments must be received within 20 days of the due date to be on time. After your ninth rehabilitation payment, the Department of Ed will tell reporting agencies to remove default from your record.
To rehabilitate defaulted Federal Perkins Loan(s), you must make a full monthly payment each month, for nine consecutive months, within 20 days of each due date. The payment amount is determined by your loan holder. Click here for information about your Perkins Loan.
Yes! One option to get out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan. Consolidation allows you to pay off your federal student loan(s) with a new consolidation loan. To consolidate your defaulted loan(s), you must either: Enter an income-driven repayment plan for your new Direct Consolidation Loan, or Make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before consolidation. (If you choose to make three payments on the defaulted loan before consolidation, the payment amount will be determined by your loan holder.)
Reconsolidating a FFEL Consolidation or Existing Direct Consolidation Loan
Direct Consolidation Loan - Along with the other two requirements, to reconsolidate your defaulted Direct Consolidation Loan, you must also include at least one other eligible loan in the consolidation. If you don’t have other eligible loans to consolidate, you can’t get out of default through loan consolidation.
FFEL Consolidation Loan - You can reconsolidate a defaulted FFEL Consolidation Loan without any additional loans in the consolidation, but only if you agree to repay the new Direct Consolidation Loan under an income-driven repayment plan. If you add other eligible loan(s) in the consolidation, you can reconsolidate a defaulted FFEL Consolidation Loan if you meet either of the two requirements above.
If you choose to repay your new consolidation loan with an income-driven plan (IDR), you must choose the repayment plan when applying for consolidation loan and giving income info.
Parent PLUS Loans - If consolidating a defaulted PLUS loan you obtained as a parent to pay for your child’s education, the only income-driven plan (IDR) you can choose is the Income-Contingent Repayment Plan (ICR).
If you make three consecutive, voluntary, on-time, full monthly payments before consolidating your defaulted loan(s), you can repay the new consolidated loan under any repayment plan you’re eligible for.
After your defaulted loan is consolidated, your new consolidation loan will be eligible for benefits like deferment, forbearance, and loan forgiveness.
The Federal Family Education Loan (FFEL) Program was a program that worked with private lenders to provide education loans guaranteed by the federal government. The FFEL Program ended in 2010. All new student loans are now made through the William D. Ford Federal Direct Loan Program.
This former loan program included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidated Loans.
There are two main owners of FFEL loans: the U.S. Department of Education and private companies. FFEL Loans owned by private companies are considered commercially held and do not receive all of the benefits that loans held by the Department of Education do. Commercially held FFEL Loans were not included in the federal student loan payment pause.
Forbearance is a period during which a borrower may temporarily stop making loan payments, temporarily make smaller payments, or extend the time for making payments. A borrower who does not meet the eligibility requirements for a deferment may, at the discretion of the loan holder, receive a forbearance if the borrower is temporarily unable to make loan payments for reasons including, but not limited to, financial hardship or illness. Borrowers are also entitled to receive forbearance if they meet certain regulatory eligibility criteria. Interest will continue to accrue during this time.
There are two main types of forbearance: general and mandatory.
General forbearance:
With this type of forbearance, your loan servicer decides whether to grant a request for “general forbearance.” You can request forbearance if you can’t make your monthly loan payments for the following reasons:
Financial difficulties,
Medical expenses,
Change in employment,
Other reasons accepted by your loan servicer.
General forbearances are available for Direct Loans, FFEL loans, and Perkins Loans. However, this type of forbearance has a maximum cap of 12 months at a time. But at the time of expiration, you can request another general forbearance. Cumulatively for a loan, you may be granted 3 years of general forbearances in total; but remember that a loan’s interest will continue to grow. Click theGeneral Forbearance Request for more information.
Mandatory forbearance:
If you meet mandatory forbearance eligibility requirements, your loan servicer is required to grant you a forbearance. Mandatory forbearances can be given for up to 12 months at a time. If you have Direct or FFEL loans and meet any of these requirements, you may be eligible:
Currently serving in AmeriCorps and have received a national service award;
if in Department of Defense Student Loan Repayment Program you qualify for partial loan repayment;
if serving in a Medical or Dental Internship/Residency;
if you are a National Guard member and have been activated;
if your Student Loan Debt Burden is more than 20% of your total monthly gross income, for up to three years (This is open to Direct, FFEL, and Perkins loans); and
if you perform teaching service which qualifies for Teacher Loan Forgiveness.
A loan servicer is a company that the federal government assigns to manage billing and other services on federal student loans, at no cost to you. Loan servicers work with borrowers on repayment options and assist with other tasks related to federal student loans. The federal government assigns borrowers to a specific loan servicer. Servicers contact borrowers after being assigned to a specific loan.
Sometimes your federal student loan servicer might change. While the federal government still owns the loan, the new servicer will take over the responsibilities of managing student loan billing and the other services of your previous servicer. If your loan is transferred, you can expect an email or letter from your new servicer to inform you of a transfer and to share their contact information. All of your loan information will be transferred to the new servicer, and any payments made during the transition will still be credited to your student loans. Please note that there will be no change in the terms of your loans.
A change in your loan servicer should be shown in your StudentAid.gov account within 7-10 business days after your transferred loans have been loaded into the new servicer’s system.
For Federal Family Education Loan (FFEL) Program loans that are not owned by the Department of Education, contact your servicer for details about repayment options and tools. To find your loan servicer, go to your account dashboard and visit the “My Loan Servicers” section.
For Federal Perkins Loans that are not owned by the Department of Education, contact the school where you received your Federal Perkins Loan for loan repayment details. It is possible that your school may be the servicer for your loan.
For HEAL Program Loans that are not in default, contact your loan servicer for help with account-related questions. To find who your servicer is, look for the most recent communication from the organization sending you bills for loan payments. For HEAL Program loans in default, contact the Debt Collection Center for help with account-related questions. HEAL Program Team: (844) 509-8957
After receiving a welcome letter from a new servicer, you should begin loan payments to the new servicer. If bank or bill paying is used to make loan payments, it is important to update the new servicer’s contact information with the bank or paying service. It is important to know that loan services will work with anyone for at no charge.
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