Federal Student Loan Default

It’s important to know that you’re not alone. Contrary to what many people think, older adults are the fastest growing group of student loan borrowers. There are over 9 million borrowers age 50 and older, this number has grown significantly in the past two decades.

There is a lot of information about recent changes in student loan default policies. The Education Department started default collections in May 2025—the first time since the pandemic relief programs started in March 2020. We will guide you on why it’s critically important to pay attention to this as an older adult borrower and make sense of the various options available to you.

What does it mean to be delinquent or in default on my Federal student loans?

If you are delinquent, it means that a payment has been missed for 90 days (about 3 months) or more. At this point, your loan servicer will report this to the three national credit bureaus which can negatively impact your credit rating. This may make it difficult to qualify for an apartment rental, an auto loan, more affordable insurance, or any new credit.

If you are in default, it means payments have been missed for over 270 days (about 9 months). When this happens, the federal government can take action to collect the money that you owe. This means the federal government can garnish up to 100% of your tax refund (as long as it’s less than your total student loan debt amount), or up to 15% of your wages or monthly Social Security retirement and disability benefits indefinitely until your loan(s) are paid off or made current.

Federal student loans do not have a statute of limitations so the federal government will continue to collect on them. They are also difficult to remove through bankruptcy, so it is critically important that you take action if your loans are in default, even if you are feeling stress and anxiety about facing the debt. The garnishment may cause financial hardship and make it more difficult for you to afford essential expenses like rent, food, or medicine. If you are having trouble paying for household bills, consider these resources from AARP Foundation.

How do I know if I’m in default or delinquent?

Log in to your account at StudentAid.gov. Your account dashboard will show you all the federal loans that you owe and their status. Additionally, if you are in default, the Federal Student Aid office will be sending emails notifying borrowers of what steps to take. As a reminder, to protect yourself from scams, do not share your StudentAid.gov login details with anyone.

If you are delinquent, but not in default…

If your federal student loan is more than 90 days (about 3 months) past due, but less than 270 days (about 9 months), there are steps that you can take to avoid defaulting. The consequences for defaulting are serious, so it’s important that you take steps to avoid that.

Log in to your account at StudentAid.gov to check the status of your loans and make sure you know who your loan servicer(s) are. As an older adult, it’s more likely that you have multiple types of federal loans, which may mean that you have multiple student loan servicers.
Log in to your student loan servicer account(s) to verify what your total past due balance is.
To get your loans current, your loan servicer will require that you either 1) pay the total past due balance or, if you can’t afford that, 2) request a retroactive deferment or forbearance. This can bring your account current. Please be prepared for long wait times when you call your loan servicer(s).
Once your loan is current, you can apply for an Income-Driven Repayment (IDR) plan to lower your monthly payment based on your income and family size. Because the Education Department paused processing IDR applications, there is a backlog so it will take time for your application to go through. Because of this, you may consider calling your loan servicer(s) to ask for an administrative forbearance (a temporary payment pause) while your application is being processed.
You may also be eligible for loan discharge programs, including the Total and Permanent Disability Discharge program (or TPD).

If you are in default, here are the steps you can take

It’s completely normal to possibly feel anxiety about checking your loan status or calling the default resolution group. Fortunately, you have options to address your default loan status. There are two feasible paths that you can take to get out of default: 1) loan rehabilitation or 2) loan consolidation. We’ll share more details on what this means below to help you make the best decision for your financial situation.

Loan Rehabilitation

You can apply to get your loan back to good standing by contacting the Federal Student Aid Default Resolution Group and setting up an account. In this process they will place you in a temporary payment plan that lasts between 9 and 10 months. The payments may be between 10%-15% of your discretionary income. If you can’t afford that, you can request a lower amount based on your finances and may have to submit additional paperwork to demonstrate financial hardship. After all consecutive payments are made, your loan will be restored to good standing. Once your loan is rehabilitated, your student loan will be assigned to a new loan servicer. If you fell behind on your payments before because they were too expensive, you should call your new loan servicer to apply for an Income-Driven Repayment plan.

Pros of Loan Rehabilitation

Once you make all consecutive payments, your loan will be restored to good standing and you’ll be eligible to enroll in an Income-Driven Repayment plan. This is important to help lower your monthly payments and make them more affordable.
Your wages, tax refund, Social Security retirement or disability benefits will no longer be garnished.
Your default record will be removed from your credit report (although you will still have a record of missed payments).

Cons of Loan Rehabilitation

You are only eligible for loan rehabilitation one time during the life of your federal student loan.
The Default Resolution Group agencies may charge collection fees which can be added to your loan balance when you complete the rehabilitation, and any unpaid interest may be capitalized. This may increase your total loan balance.

Loan Consolidation

If you have more than one federal student loan, you can apply to consolidate them into a new federal direct consolidation loan. This will remove the defaulted status from your federal student loans and make the new loan current and in good standing. After you consolidate your loans, you will have a new loan servicer. If you have trouble affording your payments, you should contact your new loan servicer to enroll in an Income-Driven Repayment plan (IDR).

Pros of Loan Consolidation

This is the fastest and most affordable way to get out of student loan default. This does not require you to make monthly payments to get current on your debt.

Cons of Loan Consolidation

If you do not have more than one federal student loan, you are not eligible for this.
You are only eligible to consolidate your defaulted loans one time during the life of your student loan.
If you have been in an Income-Driven Repayment plan and making progress towards loan forgiveness after 20 years of qualifying payments, a loan consolidation will restart the clock.
If you have any unpaid interest, this will be capitalized and added to your principal balance making the total amount of your loan increase.

I can’t afford my payments, what can I do?

After you restore your defaulted loan, you can enroll in an Income-Driven Repayment (IDR) plan. These programs base your monthly payments on your income level. Currently there are three IDR plans available to enroll in.

Income-Based Repayment (IBR)
Pay as You Earn (PAYE)
Income-Contingent Repayment (ICR)

These plans base your monthly payments on your income and household size. The Education Department has a backlog in processing IDR applications so be prepared for a delay and long wait times when you call your loan servicer.

Even if your student loans are delinquent or in default, it’s not too late—there are proven ways to get back on track. AARP Foundation hosts a webinar series on aging with student loan debt. If you want to learn more watch the recordings or register for any of our upcoming webinars.