Default on a Federal Family Education Loan Program (FFELP) Loan occurs when you fail to make payments, and your loan reaches 270 days of delinquency. If your loan defaults, your account will transfer to your guarantor, and your balance becomes due in full immediately. Additional action may occur, including wage garnishment, seizure of income tax returns, and collection fees may be assessed. Don't worry; PHEAA is here to assist you!

Who's Who

There are three key groups in the student loan life cycle. To understand who they are and how they work together, review the relationship below between your lender, servicer, and guarantor.

Loan Lender

The lender is the bank or other financial institution that provides the money for your student loan. Most likely, your lender was selected when you completed your FAFSA® (Free Application for Federal Student Aid). Although they lent you the money, they don't handle the daily management of your student loans; that would be your loan servicer.

Loan Servicer

This is the company, selected by your loan's lender, to help you handle the day-to-day management of your student loans, such as:

  • Making payments
  • Selecting a different repayment option (if applicable)
  • Assistance if you are having trouble paying, etc.

Loan Guarantor

Having a guarantor lessens a lender's risk since most students have little credit history and little collateral to repay a student loan. So, if your account defaults due to lack of payment, it would transfer from your servicer to your loan guarantor for all collection efforts.


We help defaulted student loan borrowers by providing repayment options and other programs to remove their account's defaulted status, such as the Default Loan Rehabilitation Program.

If this is the first time your account has entered default, the Rehabilitation Program is available to assist you in getting your account back in good standing.

Rehabilitation Program

This is a federally regulated incomed-based program that is only available one time. The program requires you to make nine on-time rehab eligible monthly payments within 10 months. The benefits of this program can reduce collection fees that may have been assessed and remove the default status from your credit report.

How to Enroll in the Rehabilitation Program

Contact us. When contacting us, please have your most recent federal tax return available, if possible, as your required payment for this program will be calculated based on your Adjusted Gross Income (AGI) and family size or the completion of a Financial Disclosure Form (PDF).

NOTE: If you did not file this year's taxes, we can use previously filed tax returns dating back as far as 3 years.

If your account enters default for a second time, your balance is considered due in full.

Voluntary Payment Option

If you can't pay your account in full, we could set-up voluntary payments based on your outstanding principal balance and interest.

How to Make Voluntary Payments

We want to make it as easy as possible to make your voluntary payments; therefore, we offer three options to make your payments:

  1. Direct Debit: Direct Debit lets you set up an electronic deduction from your checking or savings account. You can pick your due date and the frequency in which payments are automatically deducted. Since your loan payment happens automatically, it's applied effectively on your due date, even if it falls on a weekend or holiday.
  2. Pay by Phone: Call us to make a payment over the phone. You can pay using a check or your debit card.
  3. By U.S. Mail: Make your check or money order payable to the Pennsylvania Higher Education Assistance Agency (PHEAA) and mail it to:

    PHEAA P.O. Box 1375
    Buffalo, NY 14240-1375

    NOTE: Be sure to include your PHEAA account number on your check.

Loan Consolidation

If you can't afford to make voluntary payments, you may want to consider consolidating your loans through the Direct Consolidation Loan Program.

How to Apply for Loan Consolidation

Contact us. Our loan counselors are trained to assist you with filling out the required document needed to consolidate.

NOTE: Before you consolidate your loans, we recommend you review some pros and cons and see what your estimated payment may be before you determine if consolidation is the right option for you.

Fresh Start

If your FFELP student loan defaulted before March 13, 2020, you are eligible for the Fresh Start initiative announced by the U.S. Department of Education (ED) on April 6, 2022. Fresh Start offers an opportunity to change your loan status from default to current.

There are several additional benefits to Fresh Start if you contact us and request to participate:

  • We will transfer your loans to Nelnet, an ED loan servicer.
  • You can choose an Income-Driven Repayment (IDR) plan. On IDR, your monthly payments are based on your income and may be as low as $0 per month.
  • NOTE: Not all IDR plans available to Direct Loan borrowers are available to borrowers with FFELP loans like yours. However, you can access those additional Direct Loan IDR plans if you consolidate your FFELP loans into a new Direct Loan.

  • You will regain eligibility for federal student aid, like loans and grants.
  • You will regain access to loan forgiveness programs that may have been unavailable due to your default status.
  • You will regain access to short-term relief (deferments and forbearances).

You have 1 year after the expiration of the payment pause to take advantage of Fresh Start. In other words, customers taking advantage of Fresh Start may do so at any time (including immediately) through September 30, 2024.

Next Steps

To access Fresh Start benefits, contact us in any of the following ways:

  • Email
  • Call 1-800-233-0751
  • Send a letter asking to participate in Fresh Start to:
    P.O. Box 8147
    Harrisburg, PA 17105

You may also be able to opt into Fresh Start directly with your school's financial aid office, by signing an acknowledgement along with your application for new Title IV aid.