Consolidating federal education loans
If you make three voluntary, on-time, full monthly payments before consolidating, you can choose from any of the repayment plans available to Direct Consolidation Loan borrowers.
If you can’t afford the initial monthly payment amount described above, you can ask your loan holder to calculate an alternative monthly payment based on the amount of your monthly income that remains after reasonable amounts for your monthly expenses have been subtracted.
Take a look at the chart below to compare the benefits of loan rehabilitation versus the benefits of loan consolidation.
*NOTE: We previously indicated that loan consolidation would result in removal of the record of default from a borrower’s credit history.
One way to get out of default is to repay the defaulted loan in full, but that's not a practical option for most borrowers.
The two main ways to get out of default are loan rehabilitation and loan consolidation.
Another option for getting out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan.