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Frequently Asked Questions
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Managing Loan Default
Managing Private Loan Default
- Pay in full with a one-time payment or through a series of large payments.
- Loan rehabilitation is a one-time offer that lets you make payments based on your loan balance and interest rate. This program helps you get back into repayment on your student loan and removes the default from your credit history.
- Compromise payment. In certain situations, VSAC may accept less than the full amount owed on your loans. Please call our office to discuss this option.
How do I make payments on my defaulted student loan with VSAC?
- Online payments can be made by establishing a sign-on and password for your MyVSAC account.
- Mail payments to VSAC, PO Box 2000, Winooski VT 05404 with your account number noted in the memo section of your check.
- A bill pay service is generally offered by most banks and is an easy way to set up monthly payments to VSAC.
How do I remove my default through the loan rehabilitation program?
To qualify for the private loan rehab program, you need to agree to make 9 on-time monthly payments within 10 months. We'll calculate your qualifying payment amount over the phone at 800-954-2440. The calculation will be based on the loan balance and interest rate.
How can I lower my monthly payment amount on my loan?
Call VSAC at 800-954-2440 and request a Financial Disclosure Statement (FDS). By completing the FDS we can work with you to establish a payment amount you can afford.
Will VSAC be getting my tax refund this year? If so, how do I prevent this in the future?
VSAC participates in the Vermont Setoff Debt Collection Program for private loans originated by VSAC. Through this program (sometimes referred to as state tax offset), all or part of a borrower’s state income tax refund, property tax adjustment, and/or renter rebate may be sent to VSAC to be applied to an outstanding defaulted student loan.
You may be able to avoid tax offset by considering one of the repayment options to remove your loan from default. Contact a knowledgeable VSAC collection representative at 800-954-2440 or visit vsac.org/fresh start. VSAC can help!
A portion of my tax refund is based on my spouse’s income. Can that amount be returned to my spouse?
There may be a way for your spouse to recover their portion of your tax refund. Please speak to your tax adviser or the state tax department about an injured spouse claim.
I'm making payments as agreed on my defaulted loan, why am I receiving a letter regarding tax offset?
VSAC provides notification of tax offset as required by state requirements. However, if you're making regular monthly payments toward your defaulted student loan(s) with VSAC—in an amount acceptable to VSAC and without interruption—you can generally avoid inclusion in the tax offset program.