Types of Student Loans

Student loans fall into two categories, federal loans and private loans.

Federal loans are loans offered and regulated by the federal government.

Private loans are loans offered by private institutions and are not subject to federal oversight.


on Your Loan

Federal Loans

Your federal student loan will go into default if you have not made a payment on the loan for 270 days (nine months) and have not previously made arrangements with the lender to not make those payments. Your loan lender is required to conduct “due diligence” in attempting to contact you to collect your loan payments; in other words, the lender must repeatedly attempt to contact you about your payments.

If you believe you are in default, even if you have not received a call or letter from the lender, you should contact the lender immediately to discuss payment option and determine if it is possible for you to avoid defaulting on the loan.

Private Loans

If you have defaulted on a private student loan, the private lender may attempt to collect your debt directly or may hire a collection agency to do so. They may also take you to court or report your default to a credit reporting agency, which could be harmful for your credit. If you believe you may have defaulted on a private loan, contact your lender as soon as possible to discuss options.

Debt Collection

Federal Loans

If you have defaulted on your loan, your loan provider may use a debt collection agency to attempt to collect payment from you. See our page on debt collection for information on handling debt collectors.

There are generally three main options for you when your federal loan has gone into default and you are being contacted by a debt collector:

Rehabilitation: Rehabilitation means that your loan is taken out of default after you have made a number of consecutive and on-time payments (usually nine; this number will be determined with the lender). A loan can only be rehabilitated once.

Repayment: This is the quickest way to resolve a defaulted federal loan and involves paying off the entire loan, if you can afford to do so. In some cases, the debt collector may be able to waive some associated fees.

Consolidation: If you have multiple defaulted loans, they can be consolidated into one loan with new repayment terms. If you cannot afford to pay back your loans in full, this is the second-quickest way to get out of default. You can also consolidate loans after you have rehabilitated them, which gives you the double benefit of talking your loans out of default (by rehabilitation) and then having only one loan to pay (by consolidating).

Private Loans

For a private student loan, the lender likely will need to go to court to collect payments from you and may also report your default to a credit reporting agency, which will negatively affect your credit. It’s best for you to contact your lender as soon as possible to come to an arrangement.


Contacting an Attorney

If you feel you have been taken advantage of by a loan lender or have fallen into debt due to your student loan payments, use our Find An Attorney directory to find a NACA attorney in your area who can help.


NACA does not provide legal services or advice. The information on www.consumeradvocates.org is for informational purposes only and is not legal advice or a substitute for legal counsel. The information contained on www.consumeradvocates.org may or may not reflect the most current legal developments.

NACA provides links to attorneys, organizations, and governmental entities that promote justice for consumers and are involved in curbing abusive and predatory business practices. We do not intend such links to be referrals or endorsements of the linked entities.

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