Student loan default: collections paused, what to do (2026)

If your federal student loans are in default, use the 2026 pause in collections to get out: apply to rehabilitate or consolidate them, free, on StudentAid.gov. As of October 10, 2026, wage garnishment and tax refund offsets are paused, and no restart date has been published. Source · StudentAid.gov, Collections on Defaulted Loans

If you haven’t made a payment since COVID, your loans may already be there: Direct and FFELFFEL, Federal Family Education Loan. Federal student loans that banks and other lenders made with a government guarantee. New ones stopped in 2010. loans default after at least 270 days without scheduled payments. About 9 million borrowers were in default on March 31, 2026, owing $220 billion, according to Federal Student Aid data reported by NASFAA. Source · NASFAA, June 25, 2026

The pause gives you room to choose. Rehabilitation clears the default record but takes at least 9 months. Consolidation can finish in time for the December 31, 2026 auto pay rate cut if the new loan is made in time, but the record stays.

Collections are paused, with no restart date published

StudentAid.gov puts it plainly: “Collections through Treasury offset and Administrative Wage Garnishment are currently paused.” The Department of Education announced the delay on January 16, 2026, and had published no restart date as of October 10, 2026. Source · ED press release, Jan. 16, 2026

When collections run, your loan holder can order your employer to withhold up to 15% of your disposable pay without going to court. Treasury offset takes federal and state tax refunds and Social Security payments. Before an offset starts, a notice goes to your last-known address 65 days ahead. Source · StudentAid.gov, Collections

The pause covers garnishment and offset. The rest of default still applies: the whole balance is due at once, the default is reported to credit bureaus, and you can’t get federal student aid, deferment or forbearance. Source · StudentAid.gov, Delinquency and Default

Rehabilitation is slower but removes the default record

To rehabilitate a defaulted Direct or FFEL loan, you agree in writing to 9 voluntary monthly payments and make each one on time, all within 10 consecutive months. You start the agreement at the Defaulted Loans Support Center. Source · StudentAid.gov, Getting Out of Default

Your loan holder sets the payment from your income and family size. StudentAid.gov says it “could be as low as $5,” depending on income. If the first amount is too high, you can ask for one based on your income minus your expenses.

After the last payment, the record of default comes off your credit history, though late payments reported before the default stay. You can choose a repayment plan again and get federal student aid. Today a loan can be rehabilitated once; from July 1, 2027, each loan can be rehabilitated twice.

Consolidation can finish sooner but keeps the record and limits your plans

Consolidation pays off the defaulted loan with a new Direct Consolidation Loan. You qualify by agreeing to repay it on an income-driven plan, or by first making 3 consecutive, voluntary, on-time, full monthly payments on the defaulted loan. Source · StudentAid.gov, Getting Out of Default

StudentAid.gov says you can apply for consolidation quickly, but it doesn’t publish how long the new loan takes to be made.

What it costs you:

• The default stays on your credit history, along with the late payments before it.
• RAPRAP, Repayment Assistance Plan. A federal plan that sets your Direct Loan payment from your income. Loans first paid out on or after July 1, 2026 can use only it or the Tiered Standard plan. is the only income-driven plan for a consolidation loan made from July 1, 2026. Any loan first paid out from that date, a consolidation loan included, limits all your Direct Loans to RAP or the Tiered Standard Plan. Source · StudentAid.gov, OBBBA definitions
• A consolidation loan that includes a parent PLUS loan can’t use an income-driven plan, so you would make the 3 payments first.
• Unpaid interest is added to the balance, so future interest runs on a higher amount.
• A loan under a wage garnishment order or a court judgment can’t be consolidated until the order is lifted or the judgment vacated.

If you start now, only consolidation can finish before the auto pay deadline

Sign up for auto pay by December 31, 2026 and the rate on eligible Direct Loans drops 1 percentage point through June 30, 2028. A loan in default can’t get the cut until it is back in good standing. Source · ED press release, Sept. 29, 2026

Rehabilitation needs 9 monthly payments, so if you start now, it can’t finish by December 31, 2026. Consolidation can, if the new loan is made in time; then you sign up for auto pay with your servicer. Our auto pay rate cut guide lists which loans qualify.

Pick your route by your situation

Start from the line that fits you:

• A court judgment or garnishment order is on the loan. Consolidation is closed until it is lifted or vacated, so ask default support about rehabilitation.
• You want the default off your credit history. Rehabilitate, if this loan hasn’t been rehabilitated before, and plan on at least 9 months.
• This loan was rehabilitated before and defaulted again. Consolidate. A defaulted Direct Consolidation Loan with no other eligible loan to include can only be rehabilitated or repaid in full. A second rehabilitation for the same loan opens July 1, 2027.
• You want the auto pay rate cut. Consolidate, then sign up for auto pay by December 31, 2026. Our guide to RAP and Tiered Standard in dollars shows what each plan costs first.
• You’re going back to school. 6 on-time, full payments in a row, made by you, restore federal aid eligibility once, while the loan is still in default. Source · FSA Handbook 2026-27, Vol. 1, Ch. 3 See our guide for borrowers in default and going back to school.

Every step out of default is free

Apply at the Defaulted Loans Support Center on StudentAid.gov, which opened September 30, 2026. You can apply for rehabilitation or consolidation online, and for rehabilitation also upload documents, see an estimated payment and sign the agreement, with no mail or fax. Source · Treasury, Sept. 30, 2026

Treasury reports a 69% rise in approved rehabilitation applications in under six months of its partnership with the Department of Education, and a 95% rise in consolidations out of default. Source · Treasury, Sept. 30, 2026

By phone, default support is 1-800-621-3115. It also sets up payment arrangements and takes disputes if you think the default is a mistake. Source · StudentAid.gov, Defaulted Loans Support Center

Never pay a company for any of this. StudentAid.gov says to walk away from anyone asking for “enrollment,” “subscription” or “maintenance” fees, because your loan holder helps with a defaulted loan for free. Source · StudentAid.gov, Getting Out of Default

Your next step: get your date

The Student Loan Deadline Check asks where your loans stand and lays out the free federal steps for your loans. For loans first paid out on or after July 2012, it shows the auto pay date too. For loans that aren’t in default, our student loan guides cover SAVE, RAP and the auto pay cut.