Payment in full
When you defaulted on your loans, the entire balance immediately became due.

Repayment arrangements
Because most borrowers who are in default cannot afford to make payment in full, your guarantor, the collection agency to which your account has been assigned, or the U.S. Department of Education can establish repayment arrangements with you. Typically, these plans require that each of your monthly installments at least cover the accruing interest and collection costs on your loans.

Loan consolidation
Under certain circumstances, you can resolve your loan default by consolidating your outstanding loans. In some cases, you may be required to make a minimum number of payments, typically three payments, before you will be permitted to consolidate your loans. Once your consolidation loan is approved, your credit report will be updated to reflect that your defaulted loan is 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 new consolidation loan.

Loan rehabilitation
From the standpoint of cleaning up your credit report, loan rehabilitation is your best option. You must first make nine, voluntary, on-time monthly payments during a 10-month period. These payments can be reasonable and affordable, but typically must at least cover accruing interest and collection costs. After you have made your required nine monthly payments, your guarantor will assist you in locating a lender that will purchase your defaulted loan. Once your loan is rehabilitated, the reporting of your default will be deleted from your credit report, and you will have a new loan on which you will be making payments. Note that you may rehabilitate defaulted loans only one time.