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What happens if I don't make payments on my education loans and they default?
  • If you do not pay your lender for 270 days they will file a claim for payment with the Guarantor for collections on your loan.
  • Payment is due in FULL immediately.
  • You may suffer damage to your credit report.
    • RIHEAA will report your default to the national credit bureaus if payment in full is not made within 60 days from default
    • A negative trade line may appear on your credit report for at least SEVEN years for each disbursement of your loan
    • Example: You signed one promissory note, you had 6 disbursements of funds paid to your school, 6 negative trade lines on your credit report from RIHEAA.
  • Who will see this default?
    • Potential employers
    • Creditors for cars, mortgages, credit cards, or apartment rental organizations
    • Anyone looking at your credit report
  • Your wages may be garnished until the loan is paid in FULL.
  • Your Federal and State income taxes may be garnished until your loan is paid in FULL.
  • You may have collection costs up to 20% added to your outstanding balance.
What happens if I can not pay my educational loan in full when I default?
  • RIHEAA is willing to establish reasonable and affordable payment arrangements with you.
  • Your account will be assigned to a collection agency to establish a reasonable and affordable payment arrangement.
  • Keep in mind there is no statute of limitations on collections of a Federal Stafford Loan and collection effort may continue for many years.
    • Example: If your loan defaulted in 1973 it is still collectable today until paid in full.
Is there a way to get my loan(s) out of default?

Yes! Everyone deserves a 'do over' even if you defaulted on your educational loans. The programs listed below are available to assist you back into repayment and improve your credit history!

  • You will need to establish a reasonable and affordable payment arrangement with your assigned collection agency.
  • You will need to make 9 consecutive, voluntary monthly payments
  • Your collection costs, if earned will be reduced from 20% to 18.5%
  • You will receive a new lender and your account will be in good standing
  • You should continue paying your assigned collection agency until you have been notified your rehabilitation is complete
  • Your negative trade lines will be deleted from your credit report 30 to 60 days after rehabilitating!

  • You will need to apply for consolidation with Direct Consolidation. Go to for more details.
  • You should continue paying your assigned collection agency until you have been notified that your consolidation is complete
  • Your credit report will be updated to read 'paid by consolidation' and the trade lines will stay on your credit report for at least 7 years

If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the:

  • Income-Based Repayment Plan
  • Pay As You Earn Repayment Plan, or
  • Income-Contingent Repayment Plan.