Student Loan “Paid in Full by Claim” or “Assigned to Government” — What It Means

If your student loan shows “paid in full by claim” or “permanently assigned to government,” it means the government paid the lender after default and took over the debt. It does not mean the loan was forgiven, discharged, or settled.

“Paid in full by claim” means the lender or guaranty agency was paid through a government claim or insurance claim after the loan went into default. It does not mean you paid off the loan.

After default, the lender filed a claim under a federal insurance or guaranty program. The government reimbursed the lender for its loss. Once that payment was made, the lender closed its account and marked it paid in full—because the lender was made whole.

That label reflects the lender’s accounting, not the status of your debt.

The obligation did not disappear. After the claim payment, the loan is transferred or reassigned to a government holder so the government can collect what it paid out. This is why borrowers often see “paid in full” even though they never made a payoff and still owe the balance under a new holder.

Note: “Paid in full by claim” means the lender was paid by insurance after default. On the other hand, “paid in full by consolidation” means the old loans

“Permanently assigned to government” means the loan entered default and was transferred to the federal government for collection. It does not mean the debt was forgiven, discharged, or written off.

This status appears after a claim payment. Once the lender or guaranty agency is paid through a government claim, the loan is reassigned to a government holder so the government can collect what it paid out. The original lender is no longer involved.

The word permanent is administrative. It signals that the loan has exited the lender or guaranty agency’s system and is now owned by the government for default collection purposes. It does not describe the life of the debt, its collectability, or your repayment options.

A loan can look paid in full and later reappear because the account changed hands, not because the debt was erased.

When a claim payment happens, the original lender’s account is closed. That tradeline may update to paid in full, reflecting that the lender was reimbursed through a government claim. From the lender’s perspective, the balance is settled—so the account stops reporting.

After that, the loan is transferred or reassigned to a government holder for collection. A new account is created under a different holder or servicer. That’s when the balance shows up again, often with new labels tied to default or government ownership.

The timing can feel confusing. Credit reports and servicer systems don’t update at the same speed. One account can close before the next one appears, creating a gap where the loan seems gone. That gap is reporting lag, not forgiveness.

These labels are system codes, not judgments. They identify who owns the loan and why it’s being reported—not whether it’s forgiven or gone.

• US Dept of Ed / GSL / ATL. This typically signals a government-owned or government-assigned loan. Variations like GSL or ATL are legacy or internal identifiers tied to federally backed loans, especially older FFEL-era accounts. The wording reflects ownership or assignment—not repayment status.

• Government claim / insurance claim. This indicates a claim payment was made after default. The government reimbursed the lender or guaranty agency for its loss. The claim explains why a prior account can show paid in full even though the debt still exists under a new holder.

• Collection account language. Once assigned, the loan may be reported as a collection account or appear under a government-contracted servicer. The language reflects default status and ownership, not a new loan or a settlement.

You may see these codes reported by the credit bureaus—Experian, Equifax, and TransUnion—at different times. Reporting cadence varies, which is why one bureau can update before another.

These labels are often mistaken for relief. They are not.

• Not forgiveness. No program erased the balance.

• Not discharge. Nothing was wiped out through bankruptcy or statute.

• Not settlement. No agreement reduced the amount owed.

• Not “it goes away after X years.” Credit reporting timelines are separate from whether a debt still exists.

The confusion comes from the wording “paid in full.” That phrase describes what happened to the lender’s claim, not your loan.

After a claim payment or government assignment, the loan continues under a different holder. That change is administrative, not discretionary. The original lender is out. A government unit or a government-contracted servicer now controls the account.

Because ownership changed, you may receive new notices or see a new account appear under a different name. That’s normal after assignment. It does not restart the loan or create a second debt. It reflects who now has the legal right to collect.

What options exist next depends on loan type and current holder. Defaulted federal or federally backed loans follow different rules than private loans, and those rules are tied to who owns the debt at the moment—not who owned it before the claim.

The current holder for federal loans is typically recorded in the federal student aid system maintained by the U.S. Department of Education. That record controls who sends notices, who reports to credit bureaus, and which resolution paths are available.