Manage Student Loan Default

Get help with your defaulted student loan

You may have defaulted on your VSAC student loan, but don’t panic! VSAC is here to guide you and help you to make a fresh start. Make a plan now to end the consequences of default.

If you have a federal or private student loan in default with VSAC, click the tabs below for information based on the type of loan you borrowed. 

You have options to get out of student loan default. The most important thing you can do is work with VSAC now. We’re here to help!

Click on the solid bars to expand or compress each of the topics.

CONSEQUENCES OF FEDERAL STUDENT LOAN DEFAULT

You may have a defaulted Federal Family Education Loan (FFEL) Program loan with VSAC.  VSAC federal loans include FFEL Stafford, FFEL PLUS loans, and FFEL Consolidation Loans.

By making a plan now, you can end the consequences of default on your VSAC federal loan, including:

  • a ruined credit history
  • placement with a collection agency
  • wage garnishment
  • confiscation of federal tax refunds or state tax refunds, property tax adjustments, and/or renter rebates through the Vermont Setoff Debt Collection Program to pay for your defaulted loan(s); or 
  • loss of federal student aid eligibility
MANAGING FEDERAL STUDENT LOAN DEFAULT

Which option works best for you and helps you meet your goals? There are several options to fully repay or get your VSAC federal student loans—including Stafford, PLUS, and Consolidation loans—out of default. To learn more, read the details below.

If you still have questions, please call VSAC at 800-954-2440 or e-mail us at collections@vsac.org. VSAC can help!  

VSAC LOAN REHABILITATION PROGRAM—apply online

Remove your default by making monthly payments through loan rehabilitation. 

Use VSAC’s loan rehab calculator to calculate your payment amount and apply online for loan rehabilitation!

Loan rehabilitation is a one-time offer that lets you make payments based on your current income and overall financial situation. This program helps you get back into repayment on your student loan and removes the default from your credit history.

Take advantage of our loan rehabilitation program! To qualify, you’ll need to agree to make 9 on-time monthly payments within 10 months. You may only rehabilitate a loan once.

HERE’S HOW THE VSAC LOAN REHABILITATION PROGRAM WORKS:

We understand that you may not be able to make pay your full monthly payment. A loan rehabilitation payment amount is based on your financial situation. Here are some examples:

Example Adjusted Gross Income (AGI) State of Residence Family Size Monthly Payment
Single Person $16,000 Vermont 1 $5
Single Person $25,000 New Hampshire 1 $79
Married $25,000 Vermont 2 $5
Married with Children $80,000 Massachusetts 4

$518

 

  1. Use VSAC’s loan rehab calculator to estimate monthly payments for your defaulted student loans, based on your financial situation. You can apply online or use the same link to print and sign a completed VSAC Loan Rehabilitation Agreement or Income and Expense Information form.

    You’ll need information from your most recent tax return, including Adjusted Gross Income and family size.

    Watch our video tutorial for more information on this option.

    Payment just right? If you accept the calculated monthly payment amount, provide VSAC with your tax return documentation showing your Adjusted Gross Income (AGI), family size, and state of residence. If you don't file taxes, please provide other proof of AGI, family size, and state of residence. For an online application, you can upload your documentation, or print, sign, and mail your agreement to VSAC.

    Payment too high? If the calculated monthly payment amount in step 1 is too high, you can request a lower payment by completing an Income and Expense Information form. To apply online, upload the completed form; or you can print, sign, and return the completed form. If approved, VSAC will send a VSAC Loan Rehabilitation Agreement for you to sign and return.

  2. Successful loan rehab! Make 9 on-time qualifying payments during a 10-month period. VSAC will send you a monthly bill. Be sure to make your payments on time!

  3. Credit repair. After you make your final payment, your loan will be transferred to a new loan servicer and VSAC will erase the default from your credit history. You also may be eligible for benefits and repayment options offered on your original loan.

DIRECT LOAN CONSOLIDATION

Consolidating your loan. You can combine your federal loans into a single consolidated loan with payments based on your income and loan amount. Once your consolidation is approved and complete, your credit report is updated to reflect that your defaulted loans are paid in full.  Unlike the VSAC loan rehabilitation program, the record of the default is not removed from your credit history.

You'll make payments on your new Direct Consolidation Loan to a new loan servicer. To learn more, visit the Department of Education’s Federal Student Aid website.

MAKE MONTHLY PAYMENTS

You can begin making one-time or automatically recurring monthly payments on your defaulted VSAC federal loan. Making unapproved payments will not remove your loan from default, so connect with VSAC to develop an approved payment plan and make a fresh start. Make payments now

LOAN FORGIVENESS

Forgiveness, cancellation, or discharge means that you no longer have to repay some or all of the money you borrowed. To take advantage of a forgiveness option, you must qualify for a program such as Total and Permanent Disability. To learn more about the types of forgiveness, cancellation, and discharge available for the different types of federal student loans, visit the Department of Education’s Federal Student Aid website.

COLLECTION PARTNERS

VSAC also works with collection agencies to support student loan repayment, while ensuring that borrowers with loans in default are aware of the consequences of their failure to repay and are aware of the options available to help them get out of default. VSAC currently partners with the following agencies for collection expertise.

Windham Professionals 
Credit Control LLC 

If you don't know which agency is currently collecting your loan, please call us at 800-954-2440.

Beware of Student Loan Default Scams

You should never pay for help with managing your loan default. VSAC will help you for free. Learn more about avoiding scams at studentaid.gov.

Click on the solid bars to expand or compress each of the topics.

CONSEQUENCES OF PRIVATE LOAN DEFAULT

Families generally borrow private loans to cover college costs that remain after borrowing federal loans.  VSAC private loans include Vermont Advantage loans or other VSAC-administered non-federal student loans. 

Make a plan now to end the consequences of default on your VSAC private loan:

  • placement with a collection agency
  • a ruined credit history
  • confiscation of state tax refunds, property tax adjustments and/or renter rebates through the Vermont Setoff Debt Collection Program to pay for your defaulted loan(s)  
  • or even a lawsuit against you.
MANAGING PRIVATE STUDENT LOAN DEFAULT

Got a goal? Let VSAC help you reach it!  

You have options available to get out of default on your VSAC private loan. Read the details below and if you still have questions, please call VSAC at 800-954-2440 or e-mail us at collections@vsac.org. VSAC can help!

INTRODUCING VSAC’S PRIVATE LOAN REHABILITATION PROGRAM

Remove your private loan default by making monthly payments through VSAC’s Private Loan Rehabilitation Program. 

How it works.

  • Qualifying monthly payment amount is calculated based on your current balance and interest rate. The loan term is 30 years for variable interest rate loans or 20 years for fixed interest rate loans.

    What's next? Contact VSAC to determine your qualifying monthly payment amount and request a Private Loan Rehabilitation Agreement. Borrowers and any cosigner must each sign an agreement to participate.

  • To qualify, you have to make 9 on-time payments within a 10-month period.

    What's next? Start making required payments after you contact VSAC.

  • Successfully completing the Loan Rehabilitation Program removes the default from your credit history and may improve your credit rating.

    What's next? You may be on the path for meeting your goal!

  • Eligibility for additional benefits upon successful loan rehabilitation, such as potential for limited short-term forbearance based on financial hardship and cosigner release.

    What's next? More benefits!

MAKE MONTHLY PAYMENTS

You can begin making one-time or automatically recurring monthly payments on your defaulted VSAC private loan. Making unapproved payments will not remove your loan from default, so connect with VSAC to develop an approved payment plan and make a fresh start. Make payments now

COLLECTION PARTNERS

VSAC also works with collection agencies to support student loan repayment, while ensuring that borrowers with loans in default are aware of the consequences of their failure to repay and are aware of the options available to help them get out of default. VSAC currently partners with the following agencies for collection expertise.

Windham Professionals 
Credit Control LLC 

If you don't know which agency is currently collecting your loan, please call us at 800-954-2440.

Beware of Student Loan Default Scams

You should never pay for help with managing your loan default. VSAC will help you for free. To learn more about avoiding scams, visit studentaid.gov.