How do I get out of student loan default?

Federal student loans enter default after 270 days of missed payments. There are two official exit paths: loan rehabilitation (9 consecutive on-time payments) and direct consolidation. Rehabilitation removes the default notation from your credit report; consolidation does not. Both restore access to federal repayment plans, deferment, and forgiveness programs.

Defaulting on federal student loans — which occurs after roughly 270 days of non-payment — triggers serious consequences: loss of eligibility for additional federal aid, potential wage garnishment, Treasury offset (seizure of tax refunds and Social Security benefits), and significant credit damage. The good news: there are two defined exit paths. Full default guidance is at studentaid.gov/manage-loans/default.

Option 1: Loan rehabilitation (recommended)

Rehabilitation requires making 9 voluntary, reasonable, and affordable monthly payments within 10 consecutive months. The payment amount is negotiated with your loan holder based on your income — it can be as low as $5/month for borrowers with very low income. Once you complete rehabilitation: your loan is transferred to a new servicer, the default notation is removed from your credit report (though the record of late payments prior to default remains), and you regain access to all federal repayment plans, deferment, forbearance, and forgiveness programs. You can only rehabilitate a given loan once.

Option 2: Direct Consolidation Loan

You can also exit default by consolidating the defaulted loan into a Direct Consolidation Loan — either by agreeing to repay the new consolidation loan under an income-driven repayment plan, or by making 3 consecutive voluntary on-time full payments on the defaulted loan first. Consolidation is faster than rehabilitation but does not remove the default notation from your credit report. It does immediately restore federal loan benefits.

What to do right now

Log in to studentaid.gov or call your loan holder to find out who holds your defaulted loan — it may have been referred to the Default Resolution Group.
Request income-based rehabilitation payments immediately. Delaying extends the period of wage garnishment and Treasury offset risk.
Stop any wage garnishment orders by initiating rehabilitation — garnishment is suspended once you complete the 9-month agreement in many cases.
After exiting default, enroll in an income-driven repayment plan to avoid future default.
Check your credit report via annualcreditreport.com after rehabilitation completes to confirm the default notation was removed.

Private companies charging fees to exit default

Avoid any third-party service that charges an upfront or monthly fee to help you out of default. Rehabilitation and Direct Consolidation are free federal programs you apply for directly through your loan holder or studentaid.gov. The CFPB warns about student loan debt relief scams that charge for services you can access for free.

What the Department of Education says

A Direct Loan is in default if the borrower has not made a payment in more than 270 days. — Federal Student Aid
Loan rehabilitation requires 9 voluntary, reasonable, and affordable monthly payments made within 10 consecutive months. Upon completion, the default notation is removed from the borrower's credit report. — Federal Student Aid
Borrowers in default on federal loans may be subject to federal tax refund offset, wage garnishment, and loss of eligibility for additional federal student aid. — Federal Student Aid
The CFPB cautions borrowers to be wary of companies that charge fees to help with student loan default resolution — these services are free through the federal government. — CFPB

Key takeaways

Federal default occurs after ~270 days of non-payment — act before Treasury offset or wage garnishment begins.
Rehabilitation (9 payments over 10 months) is the only path that removes the default notation from your credit report.
Direct Consolidation is faster but does not remove the default credit notation.
Rehabilitation payment amounts can be as low as $5/month based on income — contact your loan holder immediately.
After exiting default, enroll in an IDR plan to prevent future default.