Consolidating private loans in default
The Department gives this example: If you have both Direct Loans and other types of federal student loans, and you have been making payments toward public service loan forgiveness on your Direct Loans, you should not consolidate your Direct Loans along with your other loans.
Leaving out your Direct Loans will preserve the benefits on those loans.
(Learn the pros and cons of federal student loan consolidation.) If you’re in default, you’ll have to meet some requirements before you can consolidate your loans.
You must either: You can’t consolidate a defaulted loan that’s being collected through a wage garnishment or in accordance with a court order after a judgment is entered against you unless the garnishment order is lifted or the judgment is vacated.
These include deferment, forbearance, cancellation, and affordable repayment rights.
To consolidate a defaulted loan, you must apply through Student
After obtaining a consolidation loan, you get a fresh start, becoming eligible for new loans, grants, and even deferments.
You will no longer be listed as currently in default on your credit records, and no longer subject to tax intercepts, garnishments, or other collection efforts.
You can submit your application online or through the mail after downloading and printing a paper application.
Once you get out of default, you’ll again become eligible for benefits like deferment, forbearance, student loan cancellation, and also to receive federal student aid.