What to Do If Your Sallie Mae Student Loan is in Default

by Lynnette Khalfani-Cox, The Money Coach on April 26, 2011

in Student Loans


If you’ve missed numerous payments on your Sallie Mae loan and the loan is now in default, you’ll need to take steps to bring your overdue loan current. You can contact Sallie Mae directly by calling 1-866-913-6089 to discuss your repayment options and try to set up a more affordable payment plan. Sallie Mae offers several options for those who can no longer afford their student loan payments and may be able to offer you terms that bring your monthly payment down. Just remember that extending the life of your loan and reducing monthly payments will end up costing you more in the long run.

How a Student Loan Becomes Delinquent

When you miss one or more student loan payments, your loan will become delinquent. But if you don’t make your monthly student loan payments for 270 days, the loan goes into “default” status. At this point, the Federal government has the right to hold on to any federal tax refunds you are supposed to get, and can also garnish up to 15% of your net income. Whenever your loan falls into a default status, it will also be noted on your credit report and will reduce your credit score.


If you do end up having your wages garnished, you have the right to appeal the wage garnishment and request a hearing. You will need to fill out a “Request for Hearing” form about your wage garnishment and send it to the U.S. Department of Education Debt Collection Services Office (DCS) for review.

Options for Managing a Sallie Mae Loan in Default


You have three options when your student loan becomes delinquent or is in default.

You can:

1. Contact the lender and negotiate repayment terms.

2. Consolidate your student loans to reduce the monthly payment and get a better interest rate.

3. Apply for a loan rehabilitation program.

Remember that you can only consolidate student loans that are no longer in default status, so you will need to find a way to make at least three consecutive monthly payments on time in order to bring your account back to a healthy state.

If you aren’t able to negotiate repayment terms with Sallie Mae and a student loan consolidation loan program doesn’t seem to be the best choice, consider the benefits of a rehabilitation program.

How Loan Rehabilitation Can Help a Sallie Mae Loan in Default

Loan rehabilitation programs are designed to fix your credit and have all negative information about your defaulted student loan removed from your credit files. When you sign up for a loan rehabilitation program, you will be required to make between nine and 12 payments on time in an amount that you can afford and that has been agreed to by your lender or the Department of Education. This process helps to restore your credit and helps to bring your account up to date.


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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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