In Default on Student Loans? A New Online Support Center Lets You Apply to Fix It Without Paper Forms

Millions of borrowers are behind on federal student loans, and getting out of default has long meant phone calls, faxes and mailed forms. A new online tool aims to make that process faster and easier to follow.

On Wednesday, September 30, the U.S. Department of Education and the U.S. Department of the Treasury launched a new online tool called the Defaulted Loans Support Center. It lives on StudentAid.gov, the official federal student aid website, and lets borrowers apply online, upload documents and track their progress in one place.

What default means

A Direct federal student loan goes into default after at least 270 days, about nine months, without a scheduled payment. Before that point, a loan is considered delinquent, which is serious but still leaves more options open. Once a loan defaults, the entire balance can become due immediately and the government gains powerful collection tools.

How big the problem is

Default has become very common. According to Forbes, about 9.3 million borrowers were in default as of June 2026, holding roughly $234 billion in defaulted federal loans. The Treasury Department said more than 5 million borrowers have been in default for over six years.

Treasury Secretary Scott Bessent called the new center “an important early achievement” of a partnership between Treasury and the Education Department. Education Secretary Linda McMahon described it as “a historic step toward breaking up the federal education bureaucracy while streamlining critical resources for student loan borrowers in default.”

What you can do in the support center

Borrowers log in with their regular StudentAid.gov account. Inside the support center, you can learn what default means and what it can cost you, compare your two main ways out of default, apply online for either one and upload the documents you need. The tool also shows estimated payment amounts and lets you track where your application stands, which replaces much of the guesswork that came with paper forms.

Borrowers who consolidate out of default and then sign up for automatic payments can also get a temporary 1% interest rate reduction, according to the Treasury Department.

Path one: loan rehabilitation

With rehabilitation, you agree to a new monthly payment and make nine on-time payments within 10 consecutive months. Under a standard agreement, the payment equals 15% of your discretionary income, which is roughly your income above a set amount tied to the federal poverty guideline, divided by 12. If you can’t afford that amount, you can ask for a payment based on your actual budget, which can be quite low for borrowers with limited income.

When you finish rehabilitation, the default status is removed, collections stop and the record of the default comes off your credit reports, although late payments reported before the default may remain. Rehabilitation is generally available only once for a given loan, so it’s worth making sure you can keep up with the payments before you start.

The Treasury Department said approved rehabilitation applications have risen 69% since the partnership began.

Path two: consolidation

With consolidation, you combine your defaulted loans into a new Direct Consolidation Loan. To qualify, you typically either agree to repay the new loan under an income-driven repayment plan or make three consecutive, voluntary, on-time monthly payments on the defaulted loan first.

Consolidation can be faster than rehabilitation, which matters if you need to regain eligibility for federal student aid quickly or stop collections sooner. The trade-off is that the record of the default stays on your credit report.

What default can cost you

Default can take money directly out of your pocket. According to Federal Student Aid, the government can garnish up to 15% of your disposable pay through administrative wage garnishment without going to court. It can also keep your federal tax refund and certain federal benefits, including a portion of Social Security payments, through the Treasury Offset Program, and add collection costs to what you owe.

Default is reported to the credit bureaus, which can make it harder and more expensive to rent an apartment, get a car loan or qualify for a mortgage. Borrowers in default also lose eligibility for additional federal student aid and for repayment benefits like deferment and income-driven plans until the default is resolved.

Steps to take now

Start by checking your status. Log in to StudentAid.gov to see whether any of your loans are in default or close to it. Many borrowers lose track of loans after moving or changing servicers, so it’s worth confirming even if you think everything is fine.

If you’ve missed payments but aren’t yet in default, act now. Contact your loan servicer about options such as an income-driven repayment plan, which ties your payment to your income and family size. Getting current before the 270-day mark avoids the most serious consequences.

If you are in default, compare both exits carefully and pick the one that fits your goals. Keep copies of everything you submit and every payment you make.

Use only official websites

Getting out of default is free through StudentAid.gov and your loan holder. Be careful of companies that charge fees for help you can get at no cost, ask for your FSA ID password or promise quick loan forgiveness. Never share your login credentials. If you’re unsure whether a contact is legitimate, go directly to StudentAid.gov rather than following a link in an email or text message.