Do you have a defaulted student loan 20 years ago? Maybe you left the country. Or maybe you ignored the bills because you couldn’t afford the payments. Whatever your reason, it’s been years since you’ve dealt with your student loans. But now, you’re ready. Here are step-by-step instructions of what to do when it’s been years since you paid your student loans.
Step 1: Find your loans.
Old federal student loans are easier to find than private student loans. The Department of Education keeps a list of every type of loan you borrowed on the Federal Student Aid site. So even if your loans have fallen off your credit report, you can find them on studentaid.gov. You can also call FSA customer service at 1-800-433-3243. The representative will check the National Student Loan Data System to find your loan information.
Finding private student loans is trickier. There’s no central database for private student loan debt. To find your loans, check your credit reports with all three bureaus to see if any student loans are listed that aren’t on the FSA website. Those loans are likely private student loans. Another option is to call the most popular private lenders to see if they have an account for you. But that’s tedious and scary.
Step 2: Ask about your repayment options.
Once you find your loans, the next step is to figure out your repayment options. Federal student loan borrowers have four options to get out of default:
repayment in full
The best option for you will depend on your personal finances and whether you’ve previously consolidated your loans or completed the loan rehabilitation program. If you have an FFEL Consolidation loan, you may be able to consolidate a second time. But loan rehabilitation is limited to once per loan. Check out this guide to learn how to get student loans out of collections.
Most borrowers will want to get out of student loan default quickly to avoid tax refund offset and wage garnishment.
Private loan holders and collection agencies don’t offer the same repayment options. Unless you can find a lender willing to refinance your delinquent debt, your best option will either be negotiating a payoff or filing a student loan complaint in bankruptcy.
Learn More: Can You Settle Student Loans?
Step 3: Follow-up with the new servicer.
If you don’t negotiate a payoff, your federal loans will be sent to a new student loan servicer after you get out of default. Make sure the new company has updated contact information for you. Also, review your payment plan. If you need a lower monthly payment, look into the different income-driven repayment plans. Those plans give you an affordable payment based on your family size and discretionary income.
You can use the Loan Simulator to estimate your monthly bill under the various repayment options the Department of Education offers.