If a borrower defaults on his/her Federal Family Education Loan Program (FFELP) and/or Federal Direct Loan Program loan(s), the borrower may re-establish his/her eligibility for Federal Title IV student financial assistance funds. Eligibility will be reinstated when:
- the borrower makes six consecutive, voluntary, on-time, full monthly payments on the defaulted loan and continues the monthly payments to maintain eligibility; this is not automatic - the borrower must first request the reinstatement. A Reinstatement can only be granted once to a borrower. If it is granted and the borrower misses one monthly payment the borrower loses eligibility.
- the borrower's loan is rehabilitated by making 9 voluntary, full payments during a period of 10 consecutive months. The payments must be made within 20 days of the due date. A lump sum prepayment of future installments cannot be used to satisfy the consecutive months payment requirement. A lender must repurchase the loan for a rehabilitation to be complete.
- the defaulted loan is paid in full through consolidation; or
- the borrower pays the defaulted loan in full.
The National Student Loan Data System (NSLDS) provides the status of a student’s loans. When NSLDS has information that shows the loan has been paid in full or paid in full by consolidation, a school does not need to contact ISAC for a reinstatement letter. If a school needs verification that a student has met the requirements for reinstatement of Title IV eligibility, the school should contact School Services at firstname.lastname@example.org to obtain a reinstatement letter.
Additional sources of information on reinstatement of Title IV eligibility include: