Default Response Kit

Your Simple Guide to Fixing Student Loan Default — and Getting Approved for a Mortgage

Are you in default on your federal student loans?

You are not alone — millions of borrowers are in the same boat.
The good news: you have clear options to fix the problem and get approved for your mortgage.

How to Know If You’re In Default

• More than 270 days (9 months) of missed payments → loan is in default
• Shows as “defaulted” or “collections” on your credit report
• You may also receive wage garnishment or tax offset notices
  

3 Ways to Exit Default

1️⃣ Loan Rehabilitation

✅ You qualify if: You have not previously completed a rehabilitation for this loan.

✅ How it works: You make 9 monthly payments based on your income — often as low as $5–$50/month.

✅ Pros:

• Removes default from your credit report but loan rehabilitation can only be done once
• Restores eligibility for deferment, forbearance, IDR, and PSLF
  
  

❌ Cons:

• Takes ~9 months → not fast enough if you are trying to close on a home in 30-60 days.
  

2️⃣ Loan Consolidation

✅ You qualify if: Your loans are eligible for Direct Consolidation. You must either:
(a) Make 3 consecutive monthly payments, OR
(b) Agree to enter an Income-Driven Repayment Plan (IDR) after consolidation.

✅ Pros:

• Faster (takes 30-60 days)
• Loan leave defaulted status but still maintains missed payments on your credit report
• You can enter IDR immediately, lowering your monthly payment
• Often the best option if you want to buy a home soon
  
  

❌ Cons:

• Default will remain on your credit report for 7 years (though marked "paid")
• Not a full "credit cleanse" like rehab
  

3️⃣ Pay in Full

✅ You pay the full balance of loan + interest + collection fees.

Not practical for most borrowers but legally an option.

Important Tip: Why Not to DIY on studentaid.gov or by phone

While you can start this process yourself via studentaid.gov/manage-loans/default/get-out, many borrowers run into issues:
❌ Long phone hold times — hours on calls
❌ No paper trail or confirmation of your rehab or consolidation request
❌ No guidance on which option is best for your mortgage approval
❌ Applications get delayed — causing mortgage approvals to stall

🎓 How LoanSense Helps You Get It Done (Fast & Right)

✅ No multi-hour phone calls
✅ Clear process with tracking + paper trail
✅ We know exactly what documentation mortgage lenders need
✅ We work with your lender to help you close successfully
✅ You get fast support and guidance on what’s best for YOUR situation

📌 Next Steps

👉 Have your borrower Schedule A Complementary “Get Out of Default Session”
👉 Share this kit with those who need help → Download the Default Response Kit

LoanSense has helped thousands of borrowers exit default — and we can help you too.
Don’t let student loans stand between you and your new home!

 Contact us today to learn more ➜ Come to LoanSense's weekly training session.