Options for Defaulted Loans

Payment in full: A borrower can pay off the account in full. Contact the holder of the loan to obtain correct payoff balance and receive instructions on how to remit payment.
 
Repayment Schedule: A borrower may qualify for a repayment schedule based on their current financial situation. To establish an approved repayment schedule, contact the holder of the loan.  It is important to communicate complete information regarding financial circumstances in order to qualify for a repayment schedule.

If ISAC holds the loan, contact ISAC's Debt Management Department.

Borrowers unsure of who holds their loan(s), can access their loan records online at the National Student Loan Data System Student Access Web site. Borrowers will need to have a Federal Student Aid Personal Identification Number (PIN) to access their student loan records.

Other Default Resolution Options

Federal Loan Rehabilitation: If a borrower has a defaulted student loan and is interested in removing the default status from their credit bureau report, they may wish to participate in the Loan Rehabilitation program. To become eligible, a borrower must voluntarily make nine approved and on-time payments within a consecutive ten month period, and sign a Rehabilitation Agreement. Each of  the nine payments must be made within twenty days of the due date. A borrower may not pay a lump sum to qualify for loan rehabilitation. Again, the payments must be made on time every month; the borrower may not miss a payment,make a late payment or make a lump sum to qualify for loan rehabilitation. However, a borrower can start over if a payment is missed or make a payment past the due date.        

Approximately 60 days after the qualifying payments have been made, and the signed Rehabilitation Agreement has been received, the loan will be repurchased by a participating lender to whom all subsequent payments are to be sent. One of the benefits of loan rehabilitation is that the default status on credit bureau reports will be removed. Contact the holder of the loan to receive additional information on this program. 

Reinstatement of Federal and State Student Aid Eligibility

Borrowers with defaulted student loans are not eligible to receive additional federal or state student aid funds (student loans or grants).  They do, however, have a one-time opportunity to reinstate eligibility by voluntarily making six approved, consecutive and on-time monthly payments. Borrowers may not miss a payment or be late on any of the six agreed upon payments. They may not pay in a lump sum, or restart repayment if  a payment is missed or late. Borrowers must submit a request (in writing or by telephone) to have eligibility reinstated. It is important to remember that this is a one-time opportunity.

After eligibility is reinstated, borrowers must continue to make payments on all defaulted loan(s) even while in college. Failure to continue to make monthly on-time payments, will make a borrower ineligible for federal and state financial aid programs, including student loans, until the loan(s) are removed from default.

If ISAC holds the defaulted student loan(s), borrowers should contact ISAC's Debt Management Department. Borrowers unsure of who holds their loan(s) can access the National Student Loan Data System to retrieve their loan information or call 800.433.3243.

Loan Consolidation: A borrower can request that eligible student loan(s) be consolidated to remove them from a defaulted status.  Eligible loan(s) will be consolidated into a single, more manageable loan, with an extended repayment period.  Defaulted loan(s) will then be reported as paid in full to credit bureaus.