Avoiding Default

Contact Your Loan Servicer

Borrowers do not choose their loan servicer, but rather are assigned one. If you have federal student loans, your loan servicer is assigned by the U.S. Department of Education. Below are the various loan servicers that manage federal loans and their contact information. Most PVCC students receiving student loans have one of the following servicers:

1. Visit the National Student Loan Data System (NSLDS) website.
2. Click Financial Aid Review button.
3. Accept the terms and conditions.
4. Log in to your FSA ID. 
5. Once you log in, you’ll see a summary of all your loan data. This will include the types of student loans you have, loan amounts, as well as outstanding balances and interest.

Grace Periods

After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly. 

• The purpose of the grace period is to give you time to find employment and prepare for loan repayment.
• To find out whether a grace period is available for your specific loan, be sure to contact your lender or loan servicer before you graduate, leave school, or drop to less than half-time enrollment.
• You can pay your loan during grace. Making interest payments or applying the money toward the principal balance will help you reduce the amount of your total debt and pay off your loan sooner.

Source: You Can Deal With It

What If I'm Already in Default?

If you failed to make your payments on your federal student loan and now you are in default, don't let the consequences of default affect your financial future (including receiving federal financial aid). 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. While loan rehabilitation takes several months to complete, you can quickly apply for loan consolidation. However, loan rehabilitation provides certain benefits that are not available through loan consolidation. Take a look at the chart below to compare the benefits of loan rehabilitation versus the benefits of loan consolidation. For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, you’re considered to be in default if you have not made your scheduled student loan payments for a period of at least 270 days (about nine months).

Option 1: Loan Rehabilitation

1. Contact loan servicer.
2. Agree in writing to make nine voluntary, reasonable, affordable monthly payments (as determined by your loan holder) within twenty days of the due date and make all nine payments during a period of ten consecutive months. Depending on your income, your monthly payment under a loan rehabilitation agreement could be as low as $5.

Option 2: Loan Consolidation

If you have multiple student loans you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated. A Direct Consolidation Loan allows you to consolidate multiple federal student loans into one loan at no cost to you. Once the consolidation is complete, you will have a single monthly payment on the new Direct Consolidation Loan instead of multiple monthly payments on the loans you consolidated.

Option 3: Repayment in Full

A third option for getting out of default is to repay the full amount of your defaulted student loan. You should contact your lender for further instructions.