How To Remove Defaulted Student Loan

How To Remove Defaulted Student Loan From Credit Report?

Many students and graduates wonder, “How do I remove defaulted student loans from my credit report?” Sadly, sometimes there is no way to completely remove the original defaulted student loan from your credit report.

Some companies will promise to do this, but more often than not, these companies are scam artists.

However, there are ways that you can get out of default status. Below, we will explain what is a student loan default and what you can do about it, whether it’s a federal student loan or a private student. 

What Is a Student Loan Default?

A default on a student loan happens when you haven’t made a monthly payment on your student loan over a certain amount of time. Your loan type will influence the time needed to default on your loan and the possible penalties.

Typically, with federal loans, the loan servicer will only report your account for delinquency to the credit bureaus if you are more than 90 days late on your payment. After 270 days of nonpayment, your student loan will be in default.

When a student loan defaults, the entire loan will be due, and you’ll either need to pay the full amount or select the default-repair option through the government. To pay your outstanding loan, the government can garnish your wages straight from your paycheck and hold back any tax refunds you might be owed.

With private student loans, you could quickly go into default, even if you’ve just missed one payment. Unlike federal loans, private lenders can’t withhold your tax refunds or garnish your wages. However, they can sue you to collect the outstanding amount. You may also have to pay collection fees and immediately pay the balance.

With both private and federal student loans, defaulting on either one of these could significantly harm your credit report.

Can Defaulted Student Loans Be Removed From Your Credit Report?

In general, you can’t remove a student loan default from your credit report, especially if the information about the student loan default is accurate. Many companies out there promise to remove student loan defaults from your credit score, but more often than not, these are scams.

Some legitimate credit repair companies can assist you in disputing any incorrect information regarding your student loan.

We dig into these more below.

Defaults on Federal Student Loans

You might be able to remove a federal student default by rehabilitating the loan. For this process, you will need to pay nine reduced monthly payments for ten months. The student loan default will be moved from your credit report when you’ve made the final payment.

To start this process, you must contact your loan provider and provide information about your income. The loan provider will use this information to work out your lower monthly payment.

You can also have your student loan default removed by consolidating your student loan and meeting specific payment requirements. But this process won’t lead to the default being removed from your original loan.

In some cases, federal Direct Loans might be eligible for student loan forgiveness in the future. To qualify for this forgiveness, you will need to make at least 120 monthly payments on your loan and meet some specific employment requirements.

Defaults on Private Student Loans

Just like federal student loans, when there’s a private student loan default, there’s no way that you can remove it from your credit report. Unlike federal student loans, you won’t be able to apply for rehabilitation, either. You might be able to refinance your loan with a different private lender, but it might be difficult when you have a default showing on your credit report.

What Can Be Removed From Credit Reports?

Students Looking On Laptop

Some items can be removed from credit reports. These will include the following: 

  • Any inaccurate student loan information
  • Any account doesn’t belong to you
  • Late or missed payment on a student loan during the deferment or forbearance period
  • Incorrectly reported late or missed payments
  • Incorrectly reported student loan defaults

What Can I Do About Defaulted Student Loans?

You must pay off your student loan with monthly payments once the student loan repayment plan begins. You need to do this by the due date for each month. Any late payments could result in possible penalties and fees, but not every late payment will be displayed on your credit report.

For federal student loans, if a payment is 90 days late, it will be reported to the credit bureaus, and it will appear on your credit report as a delinquency. If federal student loans haven’t been paid in 270 days (roughly nine months), they will be seen as defaulted student loans.

A private student loan will differ in that they don’t have to follow federal student aid guidelines. Lenders will almost immediately report a single late payment and default according to the terms in the loan agreement, which was accepted when taking out the loan.

The lender can report your private loan as delinquent if it’s been more than 30 days after the first missed payment. After 120 days of being considered delinquent, the private loan can be considered in default after one missed payment. When this happens, the whole outstanding balance is due immediately.

How to Remove Defaulted Federal Student Loans

If you have one or multiple federal student loans in default, there are a few things you can do to get back into the government’s good books. One of the first things you will need to do is check if your federal student loan is in default.

You can do this in one of the following ways:

  • Check your credit report to find the status of your student loan payments
  • Login to with the Department of Education to check your repayment status
  • Contact your student loan servicer.

You can get your federal student loan out of default in two ways; consolidating your loan or loan rehabilitation.

Loan Consolidation

You can pay off your federal student loan with a new loan from a Direct Consolidation Loan that merges all your previous loans. There are two ways that you can do this.

The first involves agreeing to repay a new loan according to an income-driven repayment plan. The second method involves making on time payments for three consecutive months towards your defaulted loan before being consolidated.

When you consolidate a federal student loan, it won’t be in default anymore. That means you will once again be able to receive federal financial aid in the future. These loans will also qualify for deferment, repayment plan options, loan forgiveness, and forbearance.

However, federal student loan consolidation won’t eliminate any negatives on your credit history report. The new consolidated student loan will show on your credit report as a new account.

The new loan will pay off the original student loan, so it will be reported as closed with no outstanding balance. Any correct reports of defaults and late payments will still appear on your credit report.

Student Loan Rehabilitation

With a federal student loan rehabilitation, you must make nine out of ten payments within 20 days of the due date. The monthly payment will be a new amount based on your state, income, and household size.

To start this process, you need to contact your federal student loan servicer to discuss a student loan rehabilitation plan. When your student loan is rehabilitated, it won’t be in default anymore. These loans may also qualify for repayment plans, loan forgiveness, deferment, and forbearance, and you might be eligible for more federal student aid in the future.

A Federal Perkins loan rehabilitation might work differently. They won’t follow the standard calculation process based on the borrower’s income and household size. For this rehabilitation, you will need to make payments for nine months in a row and within 20 days of the due date for each month.

A loan rehabilitation will get rid of the default record from your credit report. After the ninth and final payment, the credit bureaus will receive a request to remove the default from your account from the Department of Education. Keep in mind that any late payments that happened before the loan went into default will stay on your credit report.

What Can You Do About Defaulted Private Loans?

A private student loan won’t have the same repayment options and protections as federal student loans. The options for default private student loans will be up to the private lenders and the terms and conditions that you and the lender mutually agreed to when taking out the loan.

In some cases, a private lender might offer some sort of loan rehabilitation program or another option for you to catch up on any missed payments. To find out what your options are, contact your private loan lender to find out what your options are when it comes to your private student loan default.


Occasionally, you might be able to refinance your private student loan with another loan to help you get out of default status. This can be done with both private and federal student loans. With refinancing federal student loans, you won’t be able to use other repayment options that normally be available otherwise.

When your loan is refinanced, you are getting a new loan from a private lender to pay off your original loan. With this new loan, you will have one monthly payment that you will need on time. The refinancing will pay off your defaulted student, but it won’t get rid of any negative reports from your credit score that already existed.

When you apply for refinancing, private lenders will use your credit score and general creditworthiness to determine if you are eligible for this.

Impact of Defaulted Student Loans And Late Payments

students studying together

When it comes to credit scores, your payment history will have a major influence on your credit score. So missing payments on your students could drastically hurt your credit score. It means you’re not paying your loan on time as you agreed with your lender.

This can lead to other negative consequences, such as the outstanding amount being immediately due. Along with the outstanding balance, you will have to pay collection fees, which can typically amount to 17.92% of the outstanding balance.

If you’ve taken out a federal student loan, the government can garnish your wages, and withhold your tax refunds. If you want another federal loan in the future, there’s a higher chance of your application being denied.

When a private student loan has gone into default, the lender can sue you for payment of the outstanding amount or send you to collections if you still haven’t paid the outstanding amount.

In Conclusion

There will be some situations when you can’t remove any accurate information from your credit report, especially if the information is accurate and possibly any negative reports that already exist.

This is true when it comes to refinancing a default private student loan. With this option, a new loan is used to pay the original defaulted student loan. It will close the original loan on your credit report, but any negative reports will still appear.

For defaulted federal student loans, loan consolidation will remove the defaulted student loan from your credit score. So, long as you make the new student loan payments. There is also the option of loan rehabilitation and loan forgiveness when it comes to federal student loans.

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