Oops, you haven’t paid your Federal Stafford, PLUS or Graduate PLUS loan within 270 days and your loan is in default. How do you get out of this?
Having defaulted Stafford, PLUS or Graduate PLUS loans on your credit report will cost you in the long run. Bad score will mean higher interest rate and credit denial until it is approved, at least 7 years. Even if you pay the loan in full, it will still be marked as default. There is only one way out of this predicament – debt rehabilitation.
It’s easier than you think! By contacting your lender and making repayment arrangements, you are on your way to a clean credit report. Your lender wants to get paid, and they know that the best way to do that is to work with you to make payments that you can afford. When you have reached a satisfactory repayment agreement with your lender, stick to it! Your loan will be moved out of default status after 9 full payments on your defaulted Stafford, PLUS or Graduate PLUS loans are made within 20 days of their due dates (12 for Perkins loans). These must be voluntary payments, garnishments or other forced payments do not count. As soon as your default status is cleared, you will be free to consolidate your loans and reduce your payments even further. contact us at http://www.feded.net for further assistance.
Note: You may be able to consolidate after 3 consecutive payments but your loan will not be taken out of default status. This will be marked as “default, paid in full” on your credit report and will still be considered a black mark, so debt rehabilitation before consolidation is mandatory for a clean credit history.