Many find student loans to be a viable funding option. Recent report by Education Data Initiative shows that federal student loans average $37,787 for each borrower. Some borrowers find it difficult to repay their loans after they graduate.

Student loans may end up in collections if you can't repay them. Delinquency can begin if your payment is missed by just one day. A default is when you've not paid your loan for 90 days or 270 days if it was a federal loan.

It's not uncommon for student loans to default. Student loan default is not uncommon. If you fall behind on your payments, the lenders will send your debts to collection. You can improve your situation if you are in default.

Find my student loan in collection

It is important to first determine if your loans are federal or privately-funded.

Federal student loan programs are administered by the U.S. Department of Education. Private student loan are provided by banks, creditunions, online lenders and others. You can check your most recent billing statement to see what loan type you have if it is unclear. It should tell you which type of loan it is.

The default rules for loans are:

  • Private Student Loans:If your loan is in default, you should investigate. After 90 days your private student loan lender may put the loans in collections. However, this timeline can vary from lender to lender.
  • Federal student loan: Federal student loan default is not considered until after 270 days. This means that you have more time.

Contact your lender if you default on a private lending.

If you defaulted on a federal loan, the Department of Education may hold it or a guaranty. The Default Resolution Group at the ED is the best place to find out about the status and repayment of federal student loans.

What you should do if federal student debts are being collected

You can pay your loan obligation in a number of ways. The federal government could withhold your income from tax refunds or federal benefits payments. This could make your financial situation worse.

Consider taking these steps to reduce the impact of your federal student loan collection.

  1. Get caught up with payments: If your student loan payment has been missed, you can avoid defaulting by making up the payments.
  2. You may not be able to catch-up on your payments. You can contact your loan servicer for more information. You may be eligible for a repayment plan based on your income.
  3. Contact ED Default Resolution Group If payment has been missed for more than 270 consecutive days, you should contact ED Default Resolution Group. This group is able to direct you toward your current loan servicing company.
  4. Ask to be included in a loan restructuring agreement Loan restructuring removes a defaulted loan. You must make nine reasonable and voluntary payments in 20 days from the due date.
  5. Prepare Your Budget for Collection If You Can't Avoid Collection, The Government can Start Collecting Debt by Withholding Funds from Your Income Tax Refund, Federal Benefit Payments, and Your Paycheck.
  6. You may want to consider bankruptcy. In some cases, you can discharge your debts through bankruptcy. If you are struggling, bankruptcy is the last option.
  7. If you can, consider full repayment.  It's a good option if you want to avoid the painful collection process.

What you should do if private student debts are in collection

Private student loans are collected differently. Consider these steps:

  1. Learn your lender's rulesPrivate lenders have different rules of collection. Learn about the default process of your lender.
  2. Catch-up on payments :A single missed payment will not cause you to default. Try to make up missed payments if possible to avoid collection.
  3. Double-check default details The lender could have made an honest mistake which pushed the loan into collections. If there are discrepancies you can dispute the loan.
  4. Make a settlement You may be able to settle your debt with a collection agency at a price lower than what you are owed. Always get all agreements in writing.
  5. Payoff your loan Paying back the debt is not usually possible. This will help you get rid of the loan.
  6. You may want to consider bankruptcy if you have no other options. To determine the best path forward, we recommend consulting with an attorney.

Can I file for bankruptcy if my student loan is in collection?

In some cases, it can be difficult to get rid of student loans.

You may be able to prove that you are experiencing undue hardship. Private student loans are more likely to qualify for bankruptcy than federal loans. Examine your options for bankruptcy with student loans.

Student Loans in Collections: How to Resolve Them

To settle a debt, you pay off less than the amount owed. To illustrate, you can settle your debts with $10,000 when you owe the original $15,000.

There are many reasons why it's a good idea to settle your student debt. Here are some strategies to settle your federal and private student loans.

Student loans

Even though federal student loan repayment can be difficult, it is possible.

It has specific guidelines regarding the acceptance of settlements. The government will usually waive collection fees and up 30% of interest or principal.

Be ready for tough negotiations. Write down all details of the settlement agreement if it is reached.

Private student loans

Negotiate a settlement with your private loan company if you are having trouble paying back the debt.

Decide how much you are able to pay back. Negotiations are only possible if there is a financial crisis. Lenders may accept one of the following solutions.

  • The lump sum
  • Monthly payments reduced
  • Interest rates are lower

Can student loans that are in collection be forgiven?

Yes. You can forgive student loans that are in collection.

Fresh Start is a new program announced by the Department of Education. Borrowers with defaulted federal loans can make payments again through the Fresh Start program without worrying about a past due balance.

Fresh Start offers loan forgiveness if you make timely payments on defaulted debts.

If you have private student loans that are not in collection, they will not be eligible for the forgiveness program.

Paying student loans through collections

You can continue making payments on your delinquent loans until you reach default. Continue to make payments as long as possible to avoid default.

If you default on your loan, the lender or loan servicer can send it to collection. Private student loan holders must now contact their lenders and determine the next course of action. You may be able to resume your monthly payments in some instances. In some cases, you can only pay a lump-sum.

Fresh Start, which is available to all federal student loan borrowers in default, allows them to resume their monthly payments whenever they want. The Fresh Start program allows you to resume monthly payments at any time.

Can you consolidate your student loan collections?

Consolidating student loan debt is a challenge, but it's not impossible.

If you want to consolidate federal student loans, then you need to either make 3 consecutive payments or sign up for a income-driven repayment program. This consolidation could result in more manageable payments.

It is possible to consolidate student loans by enlisting a third party as a signatory.

If you default on student loans, it will affect your credit rating. It may be difficult to obtain a loan for debt consolidation.


  • owenbarrett

    I'm Owen Barrett, a 31-year-old educational blogger and traveler. I enjoy writing about the places I've visited and sharing educational content about travel and culture. When I'm not writing or traveling, I like spending time with my family and friends.