Stafford Loan Default: How to Repair the Damage

A Stafford loan default is a very serious issue that requires immediate attention. Stafford loan default accounts are often pursued aggressively by both the federal government and professional collections agencies. In almost all cases, the Stafford loan default being held by the creditor is very easy to enforce in a court of law. This is because the MPN or Master Promissory Note that you sign in conjunction with filling out a FAFSA is your personal and legally binding guarantee
that you will pay the loan back- no matter what. If you find yourself unable to pay your Stafford loan as agreed, you should take the following steps in order to minimize the damage to your credit history.

*Always keep in contact with your Stafford loan administrator. This is a critical step, because as long as you keep in contact with the creditor, they will assume that you intend to pay, even payments will temporarily be reduced or withheld. If you can’t pay at all, you should talk to a Stafford loan official and ask for special assistance. Often, you can get deferments or forbearances that can last several months or more.

*Adhere to payment arrangements. Stafford loan defaults of any stage can be rehabilitated with special payment arrangements such as reduced monthly payment amounts and lower rates of interest and fees. If you set up such an arrangement, it is vital to stick to it. If you don’t there could be heavy fees and penalties.

*Pay all other bills on time. A Stafford loan default will have a negative impact on your credit. Because of this, you should always pay your other bills on time in order to minimize the effect the student loan default has on your credit score.

Creditors understand that sometimes things happen that make it impossible for students to pay their bills. By working with your creditor, you can mitigate the damage to your reputation and credit history and receive favorable payment arrangements for genuine financial hardships.

If you are struggling with payments because you have too many student loans, you should consider a PLUS loan consolidation, through which you can get a lower monthly payment and a reduced rate of interest.