I Defaulted on my Federal Student Loans and Now They’ve Doubled

“Dear Steve,

I wet to a tech school right out of high school and accrued 3100 in fed student loans. I defaulted after being denied financial hardship deferment. It has been 6 years, I am now back in school and looking to receive pel grant. The amount owed on my account is now 6300, double what I took out.

I am wondering the best way to go about getting my loan out of default. Is there a way to settle for the original amount? How about consolidation?


Dear E,

I’m afraid the loan balance exploded due to the lack of payments and the additional interest and penalties. While you can always ask for a specific accounting of how the balance was calculated, I would not be surprised to find it in the ballpark.

There are two things you can do at this point. The first is to rehabilitate the loan and after 9 consecutive full payments the past negative history can be removed from your credit report. The second would be to look into doing a Direct Loan consolidation and then putting the payments into one of the income based repayment programs with the Department of Education.
For more information on all this stuff, see The Ultimate Guide to Dealing With Student Loans You Can’t Afford.

As far as settling the debt for less than you owe, based upon your situation I can’t think of a successful case I’ve run into yet that would give you any hope of settling.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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