Collections Temporarily Delayed
On January 16, 2026, the Department of Education announced that it was temporarily delaying collection of defaulted student loans, but we don’t know how long that pause will last. If your loans are in default when the delay ends, you could face serious consequences, including losing your tax refunds, a portion of your wages, and even some of your Social Security benefits. Unlike other types of debt collection, the government can take these steps without going to court. There is no statute of limitations on collecting federal student loan debts. This means you could face collection actions for debts that are years old.
Take steps now to make sure your loans aren’t in default! If you are in default, act quickly to get out of default and avoid collections.
Loan rehabilitation is one way to get your student loan out of default. Under a loan rehabilitation agreement, you agree to make nine consecutive, on-time monthly payments based on your income to your loan holder (for Perkins Loans, you must make the full standard payment). After you make the nine payments, your loans will be put back into good standing and transferred to a new loan servicer.
Once your loans are back in good standing, it is critical to have a plan to pay your loans moving forward. You may be eligible for an income-driven repayment plan, which bases your monthly payment on your income and may be more affordable than a standard plan.
How Do I Apply for Loan Rehabilitation to Get Out of Default?
To rehabilitate your loans, you must first complete paperwork to enter into the loan rehabilitation agreement. There are two ways to complete the paperwork: 1) call the loan holder or default loan servicer to ask for the paperwork to be sent to you, or ) use the online rehabilitation portal on studentaid.gov. For most borrowers, entering a rehabilitation agreement through the online portal is significantly easier and faster–you can complete the form and enter into an agreement within 15 minutes.
Use the Online Rehabilitation Portal on StudentAid.gov
Step 1: Collect the documents you’ll need for the application: When you apply for a rehabilitation agreement, the form will ask you for your income information.
You will either need:
- A copy of your most recent tax return documents (if your income hasn’t significantly decreased since you filed your taxes) or
- Documentation, like W2s, pay stubs, or bank records, showing how much income you are making each month.
It is easier if you are able to use your tax return documents as your income documentation.
Step 2: Log in to your account on studentaid.gov.
Step 3: Go to the online rehabilitation portal at studentaid.gov/default-support/loan-rehab.
Step 4: Answer the application’s questions about your marital status and tax filing status: The online application will ask if you have access to your most recent federal tax return. It will also ask you if your income is currently lower than the income reported on last year’s taxes. If you say your income is very different, or that you either did not file your taxes or do not have access to your tax filing, the application will give you the option to use other documents, like paystubs and W2s, to prove your income. If you are married and living with your spouse, you’ll need to upload documents regarding your spouse’s financial information as well.
Note: As of September 2026, if you do not have any income documentation, you cannot use the online application to set up a rehabilitation agreement and will need to call your lender. Instructions on that process are below.
Step 5: Input information about your income and family size: Make sure you do not guess! When you are putting in your income information, make sure it matches the amounts listed on whatever documents you will use for your income documentation.
Step 6: The application will provide you with an estimated payment amount, which you can either accept or reject. If you accept the payment amount, you will be asked to upload your documents. You will then be asked to sign an agreement. If the Department checks your documents and finds that everything matches, they will process the agreement. If you reject the payment, you can use the “alternative calculation.”
Step 7: Upload your documents + review your answers: Make sure that whatever income information you entered in the application matches whatever is listed in your documentation. If they do not match, the Department may come back and say you need to re-apply for a new agreement.
Step 8: Sign your agreement: You can click a box saying that you agree to the terms of the rehabilitation agreement.
Step 9: See whether your agreement has been accepted: After you submit your application, it will show up as “in review.” When it is approved, you can go to the “My Activity” page of your studentaid.gov account to make your first payment, see your payment schedule, and download both your agreement and any documentation you submitted with your agreement.
Note: If the Department calculates a different payment amount from the one that was estimated in the application, you will need to sign a new rehabilitation agreement, which you will find on the “My Activity” page of your studentaid.gov account. Like before, you will be able to click a box to sign online. You can also choose to cancel your application if the payment amount is too high.
Entering a Rehabilitation Agreement Over the Phone
Step 1: Figure out who to contact about your defaulted loan: To start the rehabilitation process, you’ll need to contact the company in charge of collecting your defaulted loan (often called the “loan holder”). To find out who you need to contact, you can log in to your account on studentaid.gov. You can also call the Default Resolution Group at 1-800-621-3115 and ask who you should contact about getting your loans out of default with a loan rehabilitation.
If you have Direct Loans or other loans held by the Department of Education, the Default Resolution Group can help you set up a rehabilitation agreement. If you have other loan types, you may need to call a different company, but the Default Resolution Group should be able to help you figure out who to contact.
If you call the Default Resolution Group, ask the following questions and write down the answers:
- What types of loans are in default?
- How much do I owe on each of my defaulted loans?
- Who are my loan holders on each of my defaulted loans?
- Who can I call to get my loans out of default?
Step 2: Call and ask to enter a rehabilitation agreement: When you know who to call, the next step is to call to request the loan rehabilitation agreement. The loan holder will ask you questions to determine your payment under the rehabilitation agreement. They will ask you for your income and family size. Unless your income has significantly decreased, you should tell them what your adjusted gross income (“AGI”) was on your taxes last year (e.g., line 11 on Form 1040). You will then need to send in documentation of your income to formalize the agreement. They will use this information to calculate your monthly rehabilitation payment — in some cases, it can be as little as $5.
If you cannot afford the initial payment they suggest, you can tell them that it is too expensive. However, if you do so, you may need to provide proof that the payment is too expensive by completing a form and sending written evidence of your income and expenses.
Note: Make sure you ask for a rehabilitation agreement — not a payment plan or repayment agreement. Only rehabilitation agreements will remove your loans from default.
Step 3: Send in your income information, sign the rehabilitation agreement, and return it to your loan holder: You must do two things to make your rehabilitation agreement official:
- Provide proof of your income, and
- Sign a written rehabilitation agreement.
Most borrowers prove their income by sending their loan holder a copy of their last year’s tax return. The loan holder will also mail you the rehabilitation agreement. When you receive the agreement, read it carefully and sign it (if you agree). If you do not sign your agreement or provide proof of your income, any payments you make will not count towards rehabilitating your loans. Additionally, generally only payments made after signing the agreement will count towards your nine rehabilitation payments.
Step 4: Make nine months of full, on-time payments in a row to remove your loans from default: You must make nine months of on-time payments within ten months to remove your loans from default and place them back into good standing. You may be able to call your loan holder and ask for autopay to make sure you make all nine payments on time.
How can I make payments on my rehabilitation agreement?
When you are logged into studentaid.gov, go to the “My Activity” page and click on your rehabilitation agreement information. It will provide a link for you to make a payment on your rehabilitation agreement. You can either make a payment online, call to make a payment, or send a check or money order to make a payment. You can also view your payment history on that page.
If you are making a payment online, you can only use a debit or prepaid card–you cannot use a credit card. As of September 2026, you cannot set up autopay, but this may become available in the future.
If I Am In The Process Of Rehabilitating My Loans, Will Wage Garnishment, Tax Refund Seizure, Or Social Security Seizure Stop?
If you agree to a rehabilitation agreement soon after receiving notice that your loans are in default, it may be possible to prevent collections from happening at all. But if you enter a rehabilitation agreement too late, then collections – including wage garnishment and seizures of your tax refunds and Social Security benefits – may continue for at least the first five months while you’re making rehabilitation payments. You may call your loan holder once you have a rehabilitation agreement and ask them to stop collections, but they are not required to do so immediately.
After you make your first five scheduled payments, federal regulations say that any wage garnishment should stop, but you may need to call your loan holder to make sure they stop it. The Department of Education also says that the government may also stop all other collections, including seizures of your tax refunds, after you make your first five rehabilitation payments. It is worth calling after you make your first five payments and asking them to confirm they are stopping collections against you, but there is no guarantee that they will.
If collections started before you began the rehabilitation process, the collections may continue even after you begin your rehabilitation payments. To get your loan out of default, you must continue to make your rehabilitation payments, even if your wages are garnished, your tax refund is seized, or the government uses other collection powers against you.
What Happens After My Loans are Rehabilitated?
After you make your last payment under your loan rehabilitation agreement, your loan will be removed from default; collections, such as wage garnishment and tax refund offset, will stop; and you will be placed back into repayment. Your loans may also be transferred to a new loan servicer.
You should get a notice from your loan servicer about returning to repayment after you get out of default. You will have to continue to make monthly payments on your loans to avoid defaulting again, so pay close attention to any notices your loan holder or servicer sends you about your new payment amount and due date.
It’s likely that your loan servicer will put you into a standard repayment plan after your loan gets out of default, but you may be eligible for a lower payment through an income-driven repayment (IDR) plan. Under an IDR plan, your payments are based on your income and family size and could be as low as $0 per month. You can ask your loan holder or servicer about your loan repayment options, including IDR plans, and you can request an IDR plan online.
Additionally, after the rehabilitation is complete, the record of default should be removed from your credit history. However, your credit history may still show the late payments that were reported by your loan holder before the loan went into default, so your credit will still likely be impacted.
Can I Complete a Loan Rehabilitation More Than Once?
Generally, no. If you complete a loan rehabilitation on a defaulted loan and then default on that same loan again in the future, you can’t rehabilitate it a second time. Rehabilitation is a one-time opportunity.
However, this one-time rehabilitation rule does not apply:
- If you started, but didn’t previously successfully complete a rehabilitation;
- If you completed a rehabilitation agreement during the pandemic payment pause, or
- If you used Fresh Start to get out of default.
Additionally, because of changes in the law as a result of the Big Bill, beginning July 1, 2027, you will be able to complete a loan rehabilitation twice to get out of default.
