Can I Get Student Loans If I Already Have a Student Loan in Default?
If you have a federal student loan in default, you cannot get additional federal student loans until you pay off the defaulted student loans or work with the U.S. Department of Education to reinstate your federal student loan eligibility. If you default on student loans through private lending institutions, you may still be eligible for additional federal student loans regardless of the default.
Other People Are Reading
-
Defining Private Lender Loans
-
A private lender student loan is a student loan directly financed through funds from the private lending institution, such as a bank or credit union. Many private lenders offer student loans through the U.S. Department of Education's Family Federal Education Loan Program. The U.S. Department of Education provides private lenders with funding for these loans making them federal, not private student loans. Due to the recent financial crisis in the United States, a number of private lenders have suspended their participation in the FFELP.
Private Student Loan Default
-
When you default on a private student loan, you are still eligible to receive federal student loans because the U.S. Department of Education does not base federal student loan approval on credit history. This eligibility only applies if the only the private lender funded your defaulted student loans. The eligibility does not apply if the private lender funded your loan through the FFELP. You must check with your lender to find out if your defaulted student loans are private or federal loans.
-
Federal Student Loan Default
-
Once you default on a federal student loan, the U.S. Department of Education suspends your federal student aid eligibility. This suspension continues until you pay off your loan in full or get your loan out of default status. To remove the loan from default status, you must contact the loan servicer to negotiate a repayment plan. You become eligible for federal student aid after you make six on-time payments on your defaulted student loans. The servicer removes the default notation from your credit report after you make nine on-time payments.
Avoiding Default
-
The U.S. Department of Education offers a number of programs to help you avoid student loan default. You can apply for payment forbearance or deferment, which suspends or lowers your student loan payments over a number of months. Both programs are good options if you are having trouble making your payments due to financial hardship, unemployment or if you suffer a major illness that prevents you from working. Private lenders may also offer these types of programs to help you avoid default, but you need to check with your lender regarding their specific programs.
-
