How to Go Back to School With Defaulted Student Loans

• You can go back to school with defaulted student loans, but you won’t get federal aid until the default is cleared.

• Consolidation is the fastest fix for defaulted federal student loans. It restores your FAFSA access in about 1 to 2 months.

• With loan rehabilitation, you need to make 6 on-time, voluntary payments to regain federal aid eligibility.

Yes. Defaulting on your student loans (federal or private) doesn’t stop you from enrolling or being admitted to school. But it creates hurdles for financial aid.

If your federal loans are in default, you’ll lose access to federal student aid until you fix the default. Private student loan defaults don’t block federal aid directly, but they hurt your credit. That could prevent you from qualifying for graduate-level Direct PLUS Loans, certain private scholarships, or even school-offered payment plans and housing.

Debt collectors also don’t pause just because you’ve returned to school. Collection actions like lawsuits or wage garnishments can still complicate your return.

Step 1: Clear Your Loan Default

If your federal student loans are in default, you have two ways to fix it fast and unlock access to financial aid: loan rehabilitation or consolidation.

If you want to clear your default from your credit report eventually, and can afford to make 6 monthly payments, go for loan rehabilitation:

• Call your loan holder or the collection agency to set up a rehab plan

• Make six on-time monthly payments. You’ll regain access to federal student aid after the sixth

• After nine payments, your default gets wiped from your credit report

If you can’t wait to make 6 payments to go back to school and need your default cleared fast, go for loan consolidation:

• Go to StudentAid.gov and apply to consolidate your defaulted loans into a new Direct Consolidation Loan

• Pick an income-driven repayment plan during the application

• Your default status usually clears in a few weeks, restoring your aid eligibility almost immediately

Which one should you choose? Check out our guide to student loan rehabilitation vs consolidation for a deep dive into the right choice for you.

Related: How to Get Student Loans Out of Default

Step 2: Apply and Get Accepted to School

Start by choosing your desired school or program and submitting your application. You can apply and even get accepted while your loans are still in default.

But, you won’t be eligible to use federal financial aid until you resolve the default, either by consolidating your loans or by making your sixth payment in a rehabilitation plan.

Step 3: Apply for Financial Aid (FAFSA)

Fill out the Free Application for Federal Student Aid (FAFSA) and make sure to list the school you plan to attend. While you can submit the FAFSA even if you’re in default, most schools will wait to process your financial aid package until they can confirm that your default has been resolved.

Step 4: Confirm Financial Aid Eligibility and Receive Aid Award

After you’ve resolved your default, notify your school’s financial aid office. They’ll verify your updated loan status through the National Student Loan Data System (NSLDS). Once confirmed, the school will finalize your financial aid package, clearing the way for you to enroll and begin classes.

If you’re in default and planning your next steps, here’s what to keep in mind:

• You don’t need to clear private default to access federal aid. Just make sure your FAFSA is submitted and you’re not in federal default. Federal aid gives you more money with better terms than most private options.

• If you need more funding, federal loans should be your first stop. Private lenders will likely reject you until your credit improves.

• You can negotiate with your private lender. Some lenders offer settlements, payment plans, or even temporary hardship forbearance.

• Rebuilding your credit by making consistent payments. Even small payments count. You could also settle old student debts to improve your chances for future borrowing.

The system can be confusing, but that’s why we’re here.

Book a call with our student loan expert today.

We help struggling borrowers fix student loan defaults, qualify for education aid again, and get back on track.

Related reading:

• Understanding Delinquency vs. Default in Student Loans

• Can Student Loans in Default Be Forgiven?

• Is It Too Late to Address a Student Loan Defaulted 20 Years Ago?

• What Happens if You Default on Private Student Loans?

• How to Settle Federal Student Loans the Right Way