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OLCA: Office of Legislation and Congressional Affairs
   Current Section  FSA Casework FAQs
Commonly Asked Questions and Answers for FSA Constituent Casework

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  1. General Inquiries
  2. FAFSA/Applying for Federal Aid
  3. Repayment Plans and Loan Forgiveness
  4. Default
  5. Total and Permanent Disability Discharge
  6. Loan Servicers

1. General Inquiries
  1. Why do Congressional offices have to include a privacy release form in their casework requests?

    The Office of Legislation and Congressional Affairs (OLCA) must have the permission of the borrower to look into their case and discuss the information with Congressional offices. Because of this OLCA requires all Congressional offices to submit a signed privacy release with the borrower’s name, date of birth and social security number. We need the social security number, since all records are located in our system by social security number. OLCA takes privacy information seriously and have put all the proper processes in place to protect this information. OLCA asks that all Congressional offices protect the privacy information of borrowers as well. If you choose to submit an inquiry by email, we encourage Congressional offices to password protect any documents that contain privacy information. Passwords should be sent in a separate email.

  2. How does a borrower find out how many loans they have and who services them?

    A borrower can keep track of all U.S. Department of Education (Department) federal student loans through the National Student Loan Data System (NSLDS ®) a www.nslds.ed.gov. NSLDS is the central database for Federal Student Aid. Please note a borrower is required to have a PIN to access their information.

  3. What are the differences between FFEL loans vs. Direct loans?

    Under the Federal Family Education Loan (FFEL) program, private lenders provided loans to students that were guaranteed by the federal government. These loans included Federal Subsidized Stafford Loans, Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Consolidation Loans. Under the Direct Loan Program, the Department of Education is the lender and makes loans directly to students. Pursuant to the Health Care and Education Reconciliation Act (HCERA) of 2010, all new federal student loans are made through the Department’s Direct Loan Program.

  4. Where can I find information about how much financial aid students at a specific college or in a specific congressional district are receiving?

    The office of Federal Student Aid delivers aid to students through loan, grant, and work-study programs. These reports provide recipient and volume data by program for each school participating in the Title IV programs. The reports can be found on our website at: http://studentaid.ed.gov/about/data-center/student/title-iv or http://nces.ed.gov/collegenavigator/.

  5. What happens if someone steals a borrower’s identity and gets a student loan in their name?

    A Stafford Loan or PLUS loan may be discharged (canceled) if a court determines that the loan was made as a result of a crime of identity theft.

  6. Does the Department accredit institutions of higher education?

    The Departmentdoes not accredit educational institutions and/or programs. However, the Secretary of Education is required by law to publish a list of nationally recognized accrediting agencies that the Secretary determines to be reliable authorities as to the quality of education or training provided by the institutions of higher education and the higher education programs they accredit.  See our website for that list: http://www2.ed.gov/admins/finaid/accred/index.html. The Secretary also recognizes state agencies for the approval of public postsecondary vocational education and state agencies for the approval of nurse education. These agencies must meet the Secretary's criteria and procedures for such recognition and must undergo review by the National Advisory Committee on Institutional Quality and Integrity (NACIQI).  The Department does not accredit institutions in foreign countries. However, the Secretary of Education does appoint members to the National Committee on Foreign Medical Education and Accreditation, which has the responsibility for reviewing the standards that foreign countries use to accredit medical schools to determine whether those standards are comparable to the standards used to accredit medical schools in the United States. The comparability decisions made by the Committee affect whether U.S. students attending foreign medical schools can receive federal student loans.


2. FAFSA/Applying for Federal Aid
  1. Can you get financial aid for a second Bachelor’s degree?

    Yes, as long as the borrower does not exceed the allowed loan limits, he or she is able to borrow federal aid for another degree. Please note, as a result of changes made in the Consolidated Appropriations Act, he or she would not be eligible for additional Pell grants. The following chart provides maximum annual and total loan limits for subsidized and unsubsidized loans as of July 1, 2012.


    Dependent Students (except students whose parents are unable to obtain PLUS Loans)

    Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)

    First-Year Undergraduate

    $5,500—No more than $3,500 of this amount may be in subsidized loans.

    $9,500—No more than $3,500 of this amount may be in subsidized loans.

    Second-Year Undergraduate

    $6,500—No more than $4,500 of this amount may be in subsidized loans.

    $10,500—No more than $4,500 of this amount may be in subsidized loans.

    Third-Year and Beyond  Undergraduate

    $7,500 per year—No more than $5,500 of this amount may be in subsidized loans.

    $12,500 per year—No more than $5,500 of this amount may be in subsidized loans.

    Graduate or Professional Degree Students

    Not Applicable


    Maximum Total Debt from Subsidized and Unsubsidized Loans

    $31,000—No more than $23,000 of this amount may be in subsidized loans.

    $57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.

    $138,500 for graduate or professional students—No more than $65,500 of this amount may be in subsidized loans. The graduate debt limit includes all federal loans received for undergraduate study.

    Note: The maximum total loan limits include any Subsidized Federal Stafford Loans or Unsubsidized Federal Stafford Loans you may have received under the Federal Family Education Loan (FFEL) Program. As a result of legislation, no further loans are made under the FFEL Program as of July 1, 2010.
  2. Is there a waiver to become eligible for federal student aid or other federal benefits if a student did not register with the Selective Service by age 26?

    There are some specific cases, such as living outside the country or illness for the entire registration period that may qualify an individual for a waiver. Information can be found at www.sss.gov.

  3. If an individual is 18 years old, why does he/she need their parents’ financial information on the FAFSA? 

    A student’s dependency status determines whose information must be reported on the Free Application for Federal Student Aid (FAFSA). If the applicant is a dependent student, he must report his information, as well as his parents. If the applicant is an independent student, he will only have to report his information, which would include his spouse’s if they are married.

    Here are the 2013–14 questions that determine your dependency status:

    Were you born before Jan. 1, 1990?



    As of today, are you married? (Answer “Yes” if you are separated but not divorced.)



    At the beginning of the 2013–14 school year, will you be working on a master’s or doctorate program (such as an M.A., M.B.A., M.D., J.D., Ph.D., Ed.D., graduate certificate, etc.)?



    Are you currently serving on active duty in the U.S. armed forces for purposes other than training? (If you are a National Guard or Reserves enlistee, are you on active duty for other than state or training purposes?)



    Are you a veteran of the U.S. armed forces?*



    Do you have children who will receive more than half of their support from you between July 1, 2013, and June 30, 2014?



    Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2014?



    At any time since you turned age 13, were both your parents deceased, were you in foster care, or were you a dependent or ward of the court?



    Has it been determined by a court in your state of legal residence that you are an emancipated minor or that you are in a legal guardianship?



    At any time on or after July 1, 2012, were you determined to be an unaccompanied youth who was homeless, as determined by (a) your high school or district homeless liaison or (b) the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development?**



    At any time on or after July 1, 2012, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?**



    * Answer No (you are not a veteran) if you (1) have never engaged in active duty in the U.S. armed forces, (2) are currently a Reserve Officers’ Training Corps (ROTC) student or a cadet or midshipman at a service academy, (3) are a National Guard or Reserves enlistee activated only for state or training purposes, or (4) were engaged in active duty in the U.S. armed forces but released under dishonorable conditions. Also answer No if you are currently serving in the U.S. armed forces and will continue to serve through June 30, 2013. Answer Yes (you are a veteran) if you (1) have engaged in active duty in the U.S. armed forces (Army, Navy, Air Force, Marines, or Coast Guard) or are a National Guard or Reserves enlistee who was called to active duty for other than state or training purposes, or were a cadet or midshipman at one of the service academies and (2) were released under a condition other than dishonorable. Also answer Yes if you are not a veteran now but will be one by June 30, 2013.

    **If you do not have a determination that you are homeless, but you believe you are an unaccompanied youth who is homeless or self-supporting and at risk of being homeless, answer “No” to the FAFSA questions concerning being homeless. Then contact your financial aid office to explain your situation.

    If the applicant answered Yes to one or more of the questions above, he is considered to be an independent student for federal student aid purposes and will not need to provide information about his parents on the FAFSA. If the applicant answered no to every question, he is considered to be a dependent student for federal student aid purposes and must provide information about his parents’ financial aid on the FAFSA. For more information, please visit http://studentaid.ed.gov/fafsa/filling-out/dependency.

  4. How much Pell grant money can an individual receive?

    An undergraduate student can receive up to $5,550 for the 2012-13 award year if he/she meets the eligibility requirements, exhibits financial need, and has not yet earned a bachelor’s or graduate degree. Effective July 1, 2012, a student can receive the Federal Pell Grant for no more than 12 semesters. (http://www.studentaid.ed.gov/types/grants-scholarships/pell/calculate-eligibility)

  5. What if an individual needs help filling out his FAFSA?

    Help is available and accessible for every question on the FAFSA if a borrower applies online with FAFSA on the Web at www.fafsa.gov, by clicking on the “Help” button. Questions can also be directed to the Federal Student Aid Information Center 1-800-4FED-AID (1-800-433-3243). In addition, high school guidance counselors and college financial aid offices may be of help.

  6. Who can apply for a PLUS loan?

    Parents of dependent students and students pursuing a graduate or professional degree can apply for PLUS Loans.

  7. What if an individual’s grades slipped, or they did not complete enough credits, and the financial aid office said they cannot get any more federal student aid?

    The law requires a federal student aid recipient to make satisfactory academic progress in college or career school in order to retain eligibility for federal student aid. A student can talk to their school about whether they can appeal the decision that made them ineligible, so they can continue receiving federal student aid.

  8. What are the FAFSA eligibility requirements for deferred action for childhood arrivals (DACA)?

    DACA recipients do not fit into any of the Department’s categories for eligible noncitizens, and are ineligible to receive federal financial aid. They are also ineligible for most state financial aid programs. Some colleges may offer institution-specific scholarships for which DACA recipients may qualify. Colleges may require students to fill out the FAFSA solely for the purpose of determining private aid eligibility. The student must have a Social Security number to complete the FAFSA online. The FAFSA will result in a Student Aid Report bearing the Expected Family Contribution (EFC) that the school needs to determine financial need. However, the DACA recipient will not be eligible for federal student aid and will receive a “C” code on the Student Aid Report requesting documentation of citizenship.

  9. If a constituent does not have a GED or High School diploma, are they still eligible for financial aid based on the “ability-to-benefit” (ATB) test?

    Pursuant to changes in the Consolidated Appropriations Act of 2012, effective with the 2012-2013 award year, new students who do not have a high school diploma, or an equivalent such as a GED, and who did not complete secondary school in a homeschool setting are not eligible for Title IV funds. Such students can no longer become eligible by passing an approved ATB test.  However, students who were enrolled in an eligible educational program of study before July 1, 2012, may continue to be considered Title IV eligible under the ATB test.


3. Repayment Plans and Loan Forgiveness
  1. A student’s TEACH grant has turned into a loan. Why and what can they do now?

    The law requires a TEACH Grant to be converted into a Direct Unsubsidized Loan under any of the following conditions:

    • The student request that their TEACH Grant be converted to a loan for any reason.
    • The student fails to complete the program for which they received a TEACH Grant, and within 120 days of ceasing enrollment they failed to notify the Direct Loan Servicing Center that:
      • They are employed as a full-time teacher in accordance with the requirements described in their TEACH Grant Agreement To Serve (ATS); or
      • They are not yet employed as a full-time teacher in accordance with the requirements described in the ATS, but intend to meet the terms and conditions of the TEACH Grant service obligation.
    • The student did not complete the program for which they received a TEACH Grant, and within one year after they cease enrollment:
      • They have not been determined to be eligible for suspension of the 8-year period for completing their service obligation;
      • They have not reenrolled in a program for which they would be eligible to receive a TEACH Grant; or
      • They have not begun qualifying teaching service as described previously.
    • The student completed the academic program for which they received a TEACH Grant, but did not confirm to the Direct Loan Servicing Center at least once each year that they intend to satisfy their service obligation.
    • The student has completed the academic program for which they received a TEACH Grant, but did not begin or maintain qualifying employment as a teacher that would allow them to complete their required four years of employment within the maximum 8-year period.

    In addition to the conditions previously listed, any other condition that prevents the student from completing their TEACH Grant service obligation could cause a TEACH Grant to be converted to a loan.

    If a student’s TEACH Grant is converted to a Direct Unsubsidized Loan, they will be required to repay the full amount of all TEACH Grant funds received, with interest charged from the date of each TEACH Grant disbursement. The student will receive notification from the Direct Loan Servicing Center stating when the date of the first payment is due and provide a repayment schedule for the borrower.

    If the student does not meet the requirements of the TEACH Grant Program and their TEACH Grant is converted to a Direct Unsubsidized Loan, we may forgive a portion of that loan if the borrower:

    • Teaches full time for five consecutive years in certain low-income elementary and/or secondary schools and meet certain other qualifications, and
    • If they did not owe a Direct Loan or FFEL program loan as of October 1, 1998, or as of the date you obtain a loan after October 1, 1998.

    All or a portion of a TEACH Grant that was converted to a Direct Unsubsidized Loan may also be discharged under certain other conditions, as explained in the student’s ATS. For additional information on loan forgiveness, discharges, and repayment options, please visit https://teach-ats.ed.gov/ats/images/gen/exitCounseling.pdf.

  2. How do borrowers consolidate school loans and which school loans are eligible for consolidation?

    Most Federal loans are available for consolidation. Private loans are not eligible for consolidation. For a complete list of all federal student loans eligible for consolidation, contact the Direct LoanConsolidation Center by calling 1-800-557-7392 or go to www.loanconsolidation.ed.gov. If a borrower is in default, he/she must meet certain requirements before they can consolidate their loans. A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation. Therefore, a student who is applying for loan consolidation cannot include the PLUS loan the parent took out for the dependent student’s education. Here are several ways to apply for loan consolidation:

  3. How are loans automatically forgiven?

    Loans are not automatically forgiven. When an individual borrows money from the federal government, he/she sign a Master Promissory Note (MPN). The MPN states that the individual is required to repay the loan even if they do not complete their education, unless they meet certain requirements for discharge or forgiveness. Discharge or forgiveness of loans is not an automatic process. The borrower must fill out an application and submit to their servicer the relevant information required by the specific program. The below list is a quick view of the programs offered by the Department in regards to loan forgiveness, cancellations, and discharges available for borrowers.

    Type of Forgiveness, Cancellation, or Discharge

    Direct Loans

    Federal Family Education Loan (FFEL) Program Loans

    Perkins Loans

    Total and Permanent Disability Discharge




    Death Discharge




    Discharge in Bankruptcy (in rare cases)




    Closed School Discharge




    False Certification of Student Eligibility or Unauthorized Payment Discharge




    Unpaid Refund Discharge




    Teacher Loan Forgiveness




    Public Service Loan Forgiveness




    Perkins Loan Cancellation and Discharge (includes Teacher Cancellation)




  4. The borrower believes their degree is worthless since it did not prepare them for the career that the school said it would. They do not believe they should have to repay their loan. How can they get it canceled?

    The MPN states that the individual is required to repay the loan even if the individual is unable to get a job or they do not like the education they received. That said, if the borrower feels that they were defrauded or subject to dishonest practices, they can report the school to the Consumer Financial Protection Bureau (http://www.consumerfinance.gov/complaint/) and file a complaint with ED’s Inspector General http://www2.ed.gov/about/offices/list/oig/hotline.html).

  5. A borrower was told they are ineligible for the Income Based Repayment plan (IBR) or the Public Service Loan Forgiveness program (PSLF) because they are on an ineligible repayment plan. What does that mean?

    In 2007, Congress created the PSLF Program to encourage individuals to enter and continue to work full time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers.  Please note that the earliest anyone would be eligible for forgiveness under the PSLF plan is October 2017, for borrowers who became eligible at the onset of the program in October 2007. The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:

    • Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
    • Income Contingent Repayment (ICR) Plan (not available to parent Direct PLUS Loan borrowers)
    • Pay As You Earn (PAYE) plan (not available to Direct Parent PLUS Loan borrowers)
    • Standard Repayment Plan with a 10-year repayment period; and
    • Any other Direct Loan Program repayment plan; but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.

    Non-qualifying repayment plans include: Extended (Fixed or Graduated), Graduated and Consolidation Standard with term greater than 10-years.   PSLF is available for Direct Loans only.  FFEL Program and Perkins Loans do not qualify, but can be consolidated into a Direct Consolidation Loan.  Payments made on the other loans that are later consolidated do not count toward 120 payments for PSLF.  The PSLF Program provides for forgiveness of the remaining balance of a borrower’s eligible loans after the borrower has made 120 qualifying payments on those loans. In general, only borrowers who are making reduced monthly payments through income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments. Our website provides more detailed information on the PSLF plan: http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service.

  6. The borrower wants to change the interest rate for the federal student loan. Is this possible?

    No. Interest rates are set by statute. For more information on how interest is calculated, borrowers should review the exit counseling guide that provides a detailed explanation of the process: http://www2.ed.gov/offices/OSFAP/DirectLoan/pubs/exitcounselguide.pdf.  If a borrower has not yet consolidated, one of the facets of consolidation is a fixed interest rate for the life of the loan.  Our website has a wealth of information on consolidation (http://studentaid.ed.gov/repay-loans/consolidation), including the pros and cons as well as requirements for this program.

  7. A borrower applied for the Teacher Loan Forgiveness (TLF) Program, but was deemed ineligible because of the 1998 requirement. Is there a waiver for this requirement?

    No. When Congress authorized the TLF program they set the requirement that an individual must not have had an outstanding balance on Direct Loans or Federal Family Education Loan (FFEL) Program loans as of Oct. 1, 1998, or on the date that he/she obtained a Direct Loan or FFEL Program loan after Oct. 1, 1998. 

  8. I participate in the U.S. House of Representatives student loan repayment plan.  How can I obtain a 1098-E form for tax purposes?

    Your student loan servicer (the entity you make payments to) will provide you a copy of the Internal Revenue Service Student Loan Interest Statement, form 1098-E.  Your servicer may send you your 1098-E via U.S. Postal Service or electronically.  Check with your servicer if you have not yet received your 1098-E for the previous year.  If you had multiple loan servicers in 2011, you will receive a separate 1098-E from each servicer. If you are not sure who your loan servicer is, you can look it up on www.nslds.ed.gov or call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913). To see a list of Federal Student Aid servicers for the Direct Loan Program and for FFEL Program Loans purchased by the U.S. Department of Education, go to our Loan Servicer page.

  9. What are the tuition refund policies for a student who drops their classes?

    Tuition refund policies for students who drop courses are not set by the Department of Education and vary by institution. A full refund is usually predicated upon the drop/add date established by the institution. Therefore, it is imperative that students are aware of these critical dates. The institution is not required to fully refund tuition if a class is dropped beyond the drop/add date.

  10. Can a Parent PLUS Loan be transferred to the student and become the student’s responsibility to repay?

    No. A PLUS loan made to the parent cannot be transferred to the student. The parent is responsible for repaying the PLUS loan

  11. Is there a grace period with a PLUS loan?

    Repayment of a Direct PLUS loan begins when the loan is fully disbursed. The first payment is due 60 days after the final disbursement. However, a borrower may request to defer payment while the student is enrolled at least half-time (for Direct PLUS loans first disbursed on or after July 1, 2008) and for an additional six months.

  12. The borrower wants to go on an income repayment plan but their payment would go up. Why?

    The Department offers several repayment plans for which the monthly payment is calculated based on the borrower’s income relative to poverty. A repayment plan that is calculated based on income may raise their monthly payment if they earn more than a certain amount (combined with the other factors described below). Please note that the following information is only related to the calculation of the payment and additional conditions and eligibility criteria apply. More detailed information about repayment options can be found on our website at http://studentaid.ed.gov/repay-loans/understand/plans.

    • Income-Based Repayment (IBR) Plan:
      • The maximum monthly payments will be 15 percent of discretionary income, the difference between the borrower’s adjusted gross income and 150 percent of the poverty guideline for their family size and state of residence (other conditions apply).
      • Payments can change as the borrower’s income changes.
    • Pay As You Earn Repayment Plan:
      • The maximum monthly payments will be 10 percent of discretionary income, the difference between the borrower’s adjusted gross income and 150 percent of the poverty guideline for their family size and state of residence (other conditions apply).
      • Payments can change as the borrower’s income changes.
    • Income-Contingent Repayment (ICR) Plan:
      • Payments are calculated each year and are based on
        • the borrower’s adjusted gross income, family size, and the total amount of their Direct Loans; and
        • the lesser of
          • the amount they would pay if they repaid their loan in 12 years multiplied by an income percentage factor that changes with their annual income; or
          • 20 percent of their monthly discretionary income. 
      • Payments can change as the borrower’s income changes.
  13. The borrower’s loan principal is higher than the amount that they originally borrowed. They have faithfully made payments. How is this possible?

    The reason for this is capitalization of interest. Capitalization is the addition of unpaid interest to the principal balance of a loan.  When the interest is not paid as it accrues during periods of in-school status, the grace period, deferment, or forbearance, a lender may capitalize the interest. This increases the outstanding principal amount due on the loan and may cause the borrower’s monthly payment amount to increase. Interest is then charged on that higher principal balance, increasing the overall cost of the loan. Capitalization can also occur when an individual consolidates their loans. If the borrower chooses not to pay off the interest of the loans that they are consolidating, that interest will be capitalized into the principal of the new consolidation loan. Additionally, under some repayment plans, the monthly payment will not cover all the interest and that interest can be capitalized. The borrower should be sure to carefully review the advantages and disadvantages of consolidation and repayment plans before making a decision on which plan is best for them.


4. Default
  1. The borrower’s loans are in default. How can they rehabilitate them?

    There are several options for a borrower to get out of default (https://studentaid.ed.gov/repay-loans/default/get-out), the most common being loan rehabilitation. To rehabilitate a Direct Loan or FFEL Program loan, the borrower and ED must agree on a reasonable and affordable payment plan. The rehabilitation process involves satisfying the agreed upon monthly payments on time for 9 months. Outstanding collection costs may be added to the principal balance, increasing the total the borrower owes. Delinquencies (late payments) reported before the loan defaulted will not be removed from the borrower’s credit report. Direct Loans and FFEL loans owned by the Department that are in default are assigned to the Department’s Default Resolution Group for collection.  For information on these loans, the borrower should go to: https://www.myeddebt.com/borrower/.  Defaulted FFEL loans that are not held by the Department will be assigned to a guaranty agency for collection. Remember; contact the school for a Perkins Loan.

  2. How often is NSLDS updated for defaulted loans that are no longer in default?

    For a specific servicer or Guaranty Agency’s (GA) loan reporting schedule, search for that servicer/GA using the Data Provider Schedule link on the Org tab. Guaranty Agencies which administer Federal Family Education Loan (FFEL) Program loans, report loan information at least monthly, many, more frequently. Schools or their servicers report Perkins loan information monthly. Schools or their servicers report overpayments within 30 days of discovery of the overpayment. The Department’s Debt Collection and Direct Loan servicers report information weekly. COD reports information daily on Pell,. Schools and guaranty agencies also report enrollment at least monthly. https://www.nsldstraining.ed.gov/nslds_FAP/static/faq.jsp#3

  3. A borrower is unable to get another student loan because they defaulted on their current loan. How can they become eligible for another loan?

    The consequences of default can be severe, including loss of eligibility for additional federal student aid, deferment, forbearance, and repayment plans. Options for getting out of default include loan repayment, loan rehabilitation, and loan consolidation. Summary information about each of these options follows, and more detailed information can be found on our website at http://studentaid.ed.gov/repay-loans/default/get-out.

    • Loan Repayment: repaying your defaulted student loan in full.
    • Loan Rehabilitation: To rehabilitate your Direct Loan or FFEL Program loan, you and ED must agree on a reasonable and affordable payment plan.
    • Loan Consolidation: allows you to pay off the outstanding combined balance(s) for one or more federal student loans to create a new single loan with a fixed interest rate.

    If an individual is having trouble making payments on a FFEL or Direct loan, they should immediately contact their loan servicer. If the borrower is unsure which type(s) of loan(s) they have, they can check their original loan documents or use NSLDS at http://www.nslds.ed.gov/nslds_SA/.

  4. What are the garnishment regulations and what funds can be garnished?

    Administrative offset is authorized by the Debt Collection Act of 1982 and the Debt Collection Improvement Act of 1996.  Any account with the U.S. Department of Education (ED) that has a balance and has not been in repayment for over 360 days, is referred to ED’s Defaulted Loan System (Debt Management Collection System) for servicing.  Those debts are eligible for referral to the U.S. Department of the Treasury’s Financial Management Service (FMS) for offset as well as assigned to Private Collection Agencies (contractors for ED) for collection.  Treasury may offset payments from an authorized (now or in the future) payment stream of individuals who are indebted to the federal government.  The payment streams include federal and state income tax refunds, Office of Personal and Management (OPM) disability or retirement payments, vendor payments, stipends, reimbursement checks for Federal Travel, and Social Security Benefits (retirement, disability and survivor benefits).  At this time, Supplemental Security Income (SSI) payments are not being offset.

  5. If a borrower’s spouse defaults on their student loan, and they co-hold their mortgage, can the bank put a lien on the couple’s home?

    The Department cannot put a lien on a borrower’s home but the loan holder’s salary and benefits could be garnished.


5. Total and Permanent Disability Discharge
  1. What is the process for the Total and Permanent Disability Discharge (TPD)?

    A borrower may be eligible for TPD if he/she is unable to engage in any substantial gainful activity because of a medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months. Veterans may be eligible for TPD Discharge once he/she has received a determination from the Department of Veteran Affairs (VA) that they have a service-connected disability or service-connected disabilities that are 100 percent disabling or are totally disabled based on an Individual Unemployability determination. There are several requirements that must be met for a TPD discharge, all of which are available on www.disabilitydischarge.com.  For more information on the TPD program, including the application and how to apply, borrowers should visit our website at: http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/disability-discharge. Once a TPD discharge application has been submitted, it can generally take up to 90 days to process the application and make a determination. Should a borrower be deemed eligible for TPD, they would go through a 3 year monitoring period in which they have to submit income information annually. During this monitoring period, a borrower’s loans will be put on hold and interest will not accrue.

  2. A borrower was approved for TPD. One of their federal loans was discharged but not the other. What happened?

    The current process requires a constituent to submit the TPD application to all servicers, if they have more than one servicer. The Department just finalized regulations, which will take effect July 1, 2013 [http://www.ifap.ed.gov/fregisters/attachments/FR110112FinalRule.pdf] that will streamline the process and all TPD applications will be submitted to one servicer, regardless if a borrower has more than one servicer.

  3. After the monitoring period for a borrower’s TPD discharge ends, when can they expect their loan to be permanently discharged?

    The servicer sends income verification forms out each October. After they have received the borrower’s form for the remainder of the monitoring period, the borrower can expect their loans to be permanently discharged in about 60 days. If the borrower’s monitoring period ends before October and would like to expedite the process, they can call their servicer and have the form sent early.


6. Loan Servicers
  1. What is a loan servicer?

    Loan servicers are companies that handle the billing and other services for Department of Education-held federal student loans. The loan servicer works with borrowers on repayment plans, loan consolidation, and will assist with other tasks related to the federal student loan. It is important for a borrower to maintain contact with their loan servicer, especially if circumstances change at any time during their repayment period. For more information, please visit http://studentaid.ed.gov/repay-loans/understand/servicers.

  2. Why are loans “sold” to MOHELA, or other companies?

    Loans are never “sold” but can be transferred among the Department’s servicers. The Department has several loan servicers who handle the billing and other services on all Federal student loans.  A loan servicer is assigned to each borrower after their entire loan is disbursed. A list of the Department’s loan servicers is available on our website: http://studentaid.ed.gov/repay-loans/understand/servicers
    In 2009, the Department announced that we expanded our Federal loan servicing team.  Specifically, we stated:

    As our federally-owned loan portfolio continues to grow, we are ready to move to the next step in ensuring an efficient and effective multi-servicer, borrower-centric approach to servicing. We will further expand our federal loan servicer team through contracts awarded under the HCERA/SAFRA Not-For-Profit (NFP) Servicer Program solicitation. This solicitation offered NFP entities the opportunity to submit proposals individually or in teams for servicing borrower accounts on our behalf.  Whether individual or team award, our customers will know and face one servicer. The Department will annually measure each servicer’s performance in the areas of borrower satisfaction and default management and use the results to assign additional volume when applicable.”

    The Department approved MOHELA as a loan servicer, and they were the first NFP servicers to service federally held student loans.  This means that the Department is able to transfer loans to between servicers, such as MOHELA, if it is necessary. 


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Last Modified: 05/28/2013