Consolidating defaulted private student loan
Unfortunately, in order to be eligible for Public Service Loan Forgiveness on your Federal Direct student loans, you have to be enrolled in an eligible repayment plan and consistently making on-time payments.
Make nine out of 10 on-time payments using the same formula as Income-Based Repayment, which would cap your monthly payment to 15 percent of your income or less.
It’s important that you fully understand loan rehabilitation and loan consolidation before making your decision.
Learn more about loan rehabilitation and loan consolidation.
While loan rehabilitation takes several months to complete, you can quickly apply for loan consolidation.
However, loan rehabilitation provides certain benefits that are not available through loan consolidation.
If you have a federal student loan, you may be able to reduce your payments by simply changing your student loan repayment plan, or asking for forbearance or deferment of your loans.
Private lenders offer fewer options, but may be willing to reduce your payments temporarily, if you contact them prior to missing a payment.
Canceling your loan is only available in limited situations, but if you’re in default, it could be an option for you.When it comes to paying your federal or private student loans, pretending they don’t exist or ignoring those past due notices is not a smart idea.At the first sign of financial trouble, the best thing to do is contact your student loan servicer.Unless you make three voluntary, on-time, full monthly payments on a defaulted loan before you consolidate it, your choice of repayment plans for the new will be limited to one of the income-driven repayment plans.
If you make three voluntary, on-time, full monthly payments before consolidating, you can choose from any of the repayment plans available to Direct Consolidation Loan borrowers. One option for getting your loan out of default is loan rehabilitation.
You can have your federal student loans canceled for school-related reasons, such as your school closing, or in the event of disability or death. Department of Education will accept payment in the form of checks, money orders or credit or debit cards.