Got a Letter from the Default Resolution Group? Here’s How to Fix It

• If you received a letter from the Default Resolution Group, your federal student loans are in default and need immediate attention.

• You can resolve your default by contacting the Default Resolution Group to explore options like rehabilitation or consolidation.

• The Default Resolution Group is not your regular loan servicer; they only handle loans in default, and you’ll need to take action to move your loans back to good standing.

If you’ve received a letter from the Default Resolution Group, you’re probably feeling anxious and unsure about what to do next. Defaulting on your student loans can seem overwhelming, especially if this letter is the first communication you’ve received in years.

But don’t worry—there are steps you can take to resolve your loan default and get back on track.

In this article, we’ll explain why the Default Resolution Group contacted you, what this means for your loan status, and the actions you can take right now to resolve the issue and prevent further consequences.

Related: How to Get Student Loans Out of Default Fast

The Default Resolution Group (DRG) is part of the U.S. Department of Education, responsible for handling defaulted federal student loans. If you’ve received a letter or email from them, it likely means your loans have fallen into default after missing several months of payments.

You may have been contacted through MyEdDebt.ed.gov, the official online portal operated by the Default Resolution Group. This portal allows borrowers to access information, make payments, and explore options to resolve their defaulted loans.

Related: MyEdDebt.ed.gov: How to Access and Resolve Defaulted Student Loans

This letter may be particularly urgent if you’re eligible for the Fresh Start Program, which ends on September 30, 2024. This program offers borrowers a limited-time opportunity to get out of default and avoid collections, wage garnishment, and tax refund offsets.

Defaulting on student loans can be alarming, especially if this is the first communication you’ve received in years. Many borrowers haven’t heard from their loan servicer since collections were paused during the COVID-19 pandemic. Now that those pauses are ending, it’s crucial to take action.

The good news is that receiving this letter is the first step in resolving the default. The Default Resolution Group and MyEdDebt.ed.gov offer several options, such as loan rehabilitation or consolidation, that can help you bring your loans back into good standing. Taking action now—especially before the Fresh Start Program ends—can help you avoid further consequences and regain control of your finances.

The Default Resolution Group specifically handles federal student loans that have entered default status. Default occurs when you’ve missed several months of payments, and your original loan servicer transfers your account to the DRG to begin the collections process. This means that if you’re receiving communication from the DRG, it’s likely because your loan has been in default for some time.

But know this: DRG is not your student loan servicer in the traditional sense. Unlike regular loan servicers who manage your account and process payments while your loans are in good standing, the DRG only steps in once your loans have defaulted. Their primary role is to help you resolve the default and set up a plan to bring your loans back into good standing.

The DRG works with various types of federal loans, including:

• Direct Loans (e.g., Direct Subsidized and Unsubsidized Loans)

• Federal Family Education Loans (FFEL) that are held by the government

• Perkins Loans in some cases

If your loans are managed by the DRG, it means they are in default and your regular servicer is no longer handling your account.

Once you resolve the default—whether through rehabilitation, consolidation, or other means—your loans will typically be transferred back to a regular servicer.

Related: How Do I Find My Defaulted Student Loans?

If your student loan is in default, it can feel overwhelming. But the good news is that you have options to get back on track and avoid consequences like wage garnishment or tax refund offsets. Here are the main ways to resolve your defaulted loans:

1. Loan Rehabilitation

Loan rehabilitation is one of the most common options for getting out of default. With this process, you agree to make a series of affordable monthly payments, typically based on your income. After making nine consecutive payments within a 10-month period, your loans are taken out of default and the default is removed from your credit report.

• Pros: Removes default from your credit report, which can improve your credit score. You’ll also regain access to federal benefits like income-driven repayment plans and loan forgiveness programs.

• Cons: This process takes time—nearly a year of consecutive payments before your loan is rehabilitated. Missing a payment can set you back.

2. Loan Consolidation

Another option is loan consolidation, which allows you to combine your defaulted loan with other federal loans into a single new loan. By consolidating, you can choose a repayment plan based on your income like SAVE, IBR, or other IDR Plans and get out of default more quickly.

• Pros: Quicker than rehabilitation, as consolidation can be completed in a matter of weeks. You’ll immediately get out of default and stop collections.

• Cons: Consolidation won’t remove the default from your credit report. The default will still show, but future payments will help improve your credit over time.

Related: Student Loan Rehabilitation vs Consolidation: Which Is Better?

3. Fresh Start Program

If you’ve received a letter recently, it may be because you’re eligible for the Fresh Start Program, a limited-time opportunity to get out of default without the usual hurdles of loan rehabilitation or consolidation. The program restores access to federal student aid, stops collections, and prevents wage garnishment. But it ends on September 30, 2024, so you must act quickly.

For a detailed explanation of how the Fresh Start Program works and how it can benefit you, check out our Fresh Start Program guide.

4. Payment in Full

If your financial situation allows, paying off your defaulted loan in full is another way to resolve the default. This option is rare for most borrowers but can be effective if you have access to the necessary funds.

• Pros: Immediate resolution of your default and elimination of further interest and fees.

• Cons: This option requires a large sum of money, which may not be realistic for many borrowers.

5. Federal Student Loan Compromise

Some borrowers who have been in default for years may be looking for a way to settle their student loan debt, similar to how credit card or private student loan settlements work. A federal student loan compromise could allow you to negotiate a reduced payoff amount, typically focusing on paying a portion of the outstanding balance or waiving accrued interest. But this option is less common and can be more difficult to secure compared to other types of debt settlements.

• Pros: Potential to settle your loan for less than you owe, particularly if a significant portion of your debt is made up of interest or fees.

• Cons: Federal student loan compromises are rare and often require persistent negotiation. The process can take time, and approval isn’t guaranteed.

For more detailed guidance on how federal student loan compromises work and whether you might qualify, you can check out our dedicated article on How to Settle Federal Student Loans.

Which Option Is Best for You?

Choosing the best option depends on your financial situation. If you can manage affordable payments, loan rehabilitation may be the best long-term solution since it can remove the default from your credit report. But if you need to resolve the default more quickly, loan consolidation might be a better option. And if you qualify, the Fresh Start Program is a unique, time-limited opportunity to get out of default with fewer hurdles.

If you’re ready to take action and resolve your student loan default, contacting the Default Resolution Group is your first step. Here’s how you can reach them and what to expect when you do:

1. Phone

You can contact the Default Resolution Group by phone at 1-800-621-3115 (TTY: 1-877-825-9923) between 8:00 AM and 8:00 PM (Eastern Time). Be prepared to provide your personal information, including your loan account details, so they can locate your records quickly.

2. Online via MyEdDebt.ed.gov

You can also access your loan information and make payments through MyEdDebt.ed.gov, the official portal for managing defaulted federal student loans. This website allows you to:

• View your loan details

• Make payments

• Explore options to get out of default (like rehabilitation or consolidation)

3. Mail

If you prefer to communicate by mail, you may have received letters from the Default Resolution Group with a return address at:

U.S. Department of Education
P.O. Box 5609
Greenville, TX 75403-5609

When you reach out, whether by phone or online, it’s important to know what you’re aiming to accomplish. Here’s how to prepare:

• Have your loan information ready: Gather any documents related to your student loans, including the letter you received and any online account details from MyEdDebt.ed.gov.

• Know your options: Familiarize yourself with the options we discussed earlier—loan rehabilitation, consolidation, and compromises—so you can ask about the best one for your situation.

• Ask about the Fresh Start Program: If you’re contacting them before September 30, 2024, mention the Fresh Start Program to see if you’re eligible for special relief.

If you believe there’s an error with your defaulted student loan or the way it’s being handled, the Default Resolution Group offers a few steps to address disputes. Here’s how you can escalate a dispute and resolve the issue:

1. Contact the DRG Directly: Your first step should be to contact the Default Resolution Group and explain the nature of your dispute. Sometimes, disputes arise from miscommunication or missing documentation, so it’s important to provide all relevant details about your loan and the issue you’re facing. If you’re unable to resolve the issue with the initial representative, ask to speak with a supervisor.

2. Escalate to the Federal Student Aid (FSA) Ombudsman: If escalating within the DRG doesn’t resolve your issue, you can take your complaint to the Federal Student Aid (FSA) Ombudsman Group. The Ombudsman Group acts as a neutral party to help borrowers resolve disputes with federal student loans. They will work with both you and the DRG to review your case and attempt to reach a resolution. You can contact the Ombudsman by visiting Federal Student Aid Ombudsman or by calling 1-877-557-2575.

3. File a Complaint with the CFPB: If you’re still unable to resolve the dispute through the DRG or the Ombudsman, you can file a formal complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB oversees issues related to student loans and can investigate if your complaint involves improper loan handling or violations of borrower rights. You can file a complaint at consumerfinance.gov.

Dealing with a defaulted student loan can feel overwhelming, but you don’t have to face it alone. Whether you’re just starting to navigate your options or you’re ready to take action, the important thing is to get started.

Contacting the Default Resolution Group is a crucial first step toward resolving your default and restoring eligibility for new student loans, Pell Grants, and loan forgiveness programs. But there are other ways you can ensure you’re making the best decision for your financial future.

If you’re still unsure about which path to take—whether it’s loan rehabilitation, consolidation, or another option—our team of student loan experts is here to help. We’ve worked with borrowers in situations just like yours, helping them get out of default and back on track.

Consider booking a consult with one of our student loan experts. We can walk you through the process, answer your questions, and help you take the right steps to resolve your default quickly and effectively.