A-Z Guide To Escape Student Loan Debt: Newly Defaulted

You just defaulted on your federal student loan. Is Department of Education after you yet? In case you’re still unaware, there’s a wide variety of consequences for failing to pay your student loans for 9 months or more. First off, the  entire balance of your student loan is now legally due in full per the terms you signed and agreed to on your promissory note. The U.S. Department of Education is the Federal Government. They don’t need to go through the state judicial system to be able to take legal actions against you. When you default on your federal student loans you open yourself up to be subjected to:

• Administrative Wage Garnishment (Paycheck Deductions)
• Treasury Tax Offsets
• Negative reporting on all 3 credit reports
• The loss of eligibility for additional student loans and financial aid
• The withholding of your school transcripts
• The withholding of professional licenses
• The loss of deferments and forbearances
• Litigation by the U.S. Department of Justice

You can avoid most of these legal actions by entering into repayment on your student loan, but first you need to write a letter to the Department of Education or the assigned collection agency expressing your intentions to resolve your defaulted student loan voluntarily. You can call them as well but the debt collectors tend to try pressuring and threatening you into paying which becomes very hassling. If you’re already receiving unending harassing collection calls for your student loan, and you want them to STOP, simply include a “cease communication” letter along with the letter
above, also find out if these collectors are staying within their boundaries under the FDCPA section on the Student Loan Blue Print. The risk of sending the “cease communication” letter is that it eliminates most of the due diligent requirements the Dept. of Education or collection agency is required to perform before they initiate legal actions against you. Remember to NEVER HANG UP ON A FEDERAL STUDENT LOAN COLLECTOR! When you hang up on them it is considered an automatic refusal to resolve your student loan and they will initial legal actions against you shortly after as long as you qualify. Make sure you keep in constant contact with the Department of Education or the collection agency after you send this letter, and begin repayment shortly after.

Your options repayment options are:

• Pay off the balance in full
• Complete the terms of a settlement compromise (partial pay-off)
• The Rehabilitation Repayment Program
• Loan consolidation
• Monthly payment plan arrangement (unbeneficial payment arrangement to have your loans paid off in default) 

Each of these repayment options are thoroughly explained and have dedicated sections in the Student Loan Blue Print. Simply refer to the page numbers listed above when navigating the Student Loan Blue Print. Start utilizing our repayment calculators so you know what your minimum payments are! What are you waiting for? Go NOW!

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