What do I do with my defaulted federal student loans? It is a question we get asked every day.

Well, Life happens. Sometimes you can not avoid defaulting on your student loans. It is unfortunate but you can recover once you are financially stable enough to resume a payment plan. I hope to simplify your options a little:

Programs listed below are for defaulted federal student loans only.

Student Loans Remediation / Rehabilitation

In my opinion this is by far the best program for dealing with your defaulted federal student loans if you can afford the monthly payment. The biggest advantage is that you can have the negative information from your credit report removed through this program.

To see if you qualify, call the servicer or lender currently holding your loan.  Ask them specifically for the “Remediation” program. They will use your currently budget information to see what your monthly payment will be. Unfortunately, through this program you can not negotiate your monthly payment. It is what the formula says.

As long as you can afford this payment and you make 10 months of on time payments, then they can erase the negative reporting from your credit report.

You may not qualify for this program if you have been convicted of loan fraud or are already being garnished for your student loans. Once your loan is rehabilitated, you may even qualify for future loan forgiveness or forbearance programs due to financial hardship.

Forbearance

Forbearance is a temporary delay or reduction of defaulted federal student loans payments due to financial hardship. You can contact your servicer or lender directly to arrange a payment plan. Under forbearance plans you can negotiate your monthly payment. Most plans have to be a minimum of $50.00 per month. Interest still accrues on the unpaid balances.

Deferment

Deferred student loan payments are available to to those the re-enroll in school, are unemployed or facing economic hardship. You may also be eligible if you are disabled, certain military service and a time thereafter. Interest does NOT accrue on the unpaid balances.

Contact your student loan servicer or lender to make payment arrangements.

Loan Repayment Assistance Programs (LRAPs)

These are programs that are offered by schools, employers, states, and the federal government. They usually make the minimum monthly payment for you on your student according to their own guidelines.

You can start your search here on Google

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Today, we’re releasing our third Snapshot of Complaints Received from Servicemembers, Veterans and their Families. The report details the data and trends from consumer complaints we’ve received from members of the military community since July 2011.

Here are just a few highlights:

  • Debt collection complaints have continued to rise since our last report, and now make up 39 percent of total complaints. It is our largest category of complaints from the military community.
  • Credit reporting remains a top category of concern. 72 percent of these complaints are about incorrect information on credit reports. This remains a significant issue for the military community, one that we highlighted earlier this year.
  • Student loans are another concern. 49 percent of these complaints are about problems dealing with a lender or servicer. In these complaints, we continue to see long-standing trends, such as servicemembers complaining about not being provided their Servicemembers Civil Relief Act rights.

This year our report also highlights our outreach efforts that allowed us to connect with thousands of members of the military community, as well as three of our enforcement actions that recovered millions of dollars for affected consumers, primarily servicemembers, veterans, and their families. These figures represent the positive impact of the work we continue to do on behalf of those who serve.

Problems with account services

Basic account servicing stands out as a significant area of concern for servicemembers. Most consumers can call their financial institution, visit a branch, or connect online to try and get the help they need to maintain their account. Unfortunately, for military personnel and their families, the realities of military life, including deployments, frequent moves, and a high operational tempo, can sometimes make access to those services extremely challenging.

We found that servicemembers were often subject to a variety of account maintenance or penalty fees, as well as account-access restrictions, which were triggered due to aspects of their military service.

These problems raise concerns that financial institutions may not have a true understanding of the servicing needs of their military customers and may lack proper procedures and protections for them. Detailed examples of servicemember experiences can be found in Section II of the report.

Check out the snapshot to learn more.

We’re listening

As always, if you have a problem with a consumer financial product that you can’t resolve on your own; or if you know someone in that situation, please remember that you can submit a complaint online or by calling (855) 411-2372. We make your voice heard.

Consumer Financial Protection Bureau