Loans in Default
Resolve Your Default, Restore Your Good Credit

If you have defaulted on a federal student loan, you still have options to resolve the default and even clean up your credit. These options include:

Making payment arrangements.  The collection agency to which your account has been assigned, your guarantor, or the U.S. Department of Education can help you establish repayment arrangements. Typically, these plans require that each of your monthly payments at least cover the accruing interest and collection costs on your loans.

Loan consolidation. Under certain circumstances, you can consolidate your defaulted loans. Once your consolidation loan is approved, your credit report will be updated to reflect that your defaulted loans are paid in full, although your credit report will continue to document that you previously defaulted on your loan. You will have to make the required payments on your consolidation loan.

Where to Get Help

Your Guarantor
If you defaulted on a Federal Family Education Loan Program loan, your student loan guarantor now owns your loan and is responsible for collecting payments from you.

To check the status of a defaulted loan guaranteed by USA Funds log in to USA Funds Loan SolutionsSM.

Collections Agencies
USA Funds, many other student loan guarantors, and the U.S. Department of Education, contract with collection agencies to work with borrowers in default.

U.S. Department of Education
If your defaulted loan has been assigned to the U.S. Department of Education:

  • Log in to USA Funds Loan Solutions.
  • Contact the Post-Claim Assistance unit of USA Funds’ service provider, Sallie Mae, at (800) 331-2314.

If you have a dispute with schools, lenders or guarantors regarding a federal education loan, and have been unable to resolve the dispute, contact the U.S. Department of Education’s Federal Student Aid Ombudsman’s office: (877) 557-2575.



Even if your loan is in default, you still have options. Download our Resolve Your Default brochure and start restoring your good credit.



If you are in the process of rehabilitating a defaulted loan or previously have rehabilitated a loan out of default, review our resources to stay on track.