PA-Student-Loan-DebtIf you default on a federal student loan, a debt collector may contact you.

You have options when dealing with the collector. The first is rehabilitation. This means your loan will be taken out of default after you make consecutive (generally, nine) on-time, reasonable, and affordable, payments. This is the only way to remove the default status from your credit history. If you decide to go back to school, your eligibility will be restored for federal student aid after you make the sixth of nine monthly payments. If the collection agency tells you there is a minimum monthly payment or a down payment is required to rehabilitate the loan, this is false. You are only required to pay what is reasonable and affordable. The collection agency may ask for financial information supporting your request for a lower payment than they suggested.

The second option is consolidation. With this option your defaulted loans are paid off by a new loan with new repayment terms. This is the fastest way to get out of default and enroll in the U.S. Department of Educations’ alternative payment plans. However, unlike rehabilitation, consolidation will not reverse the negative reporting on your credit report.

The third option is repayment. If you explore this option, ask the collector if they are authorized to waive some of the outstanding fees and collection costs. Keep in mind, if the debt is paid off, it will continue to appear on your credit report as a negative account that was repaid. If you feel the collector is trying to collect a loan you aren’t responsible for, check the online National Student Loan Data System. This system only shows your federal student loans.