Default Recovery

There are serious consequences to defaulting on your student loan; however, there are options to help you recover from default. New Mexico Student loans can assist you regaining your eligibility for federal student financial aid and improving your credit rating. The following options can help get your student loan back in good standing:

Regain eligibility for federal financial aid by making six full consecutive monthly payments within 15 days of the due date. The payments must be voluntary and cannot be the result of legal proceedings, wage garnishment, or a lump sum prepayment of future payments. You must continue to make your loan payments on time to qualify. If payments are missed or not made within 15 days of the due date, the loan must be paid in full before receiving additional financial aid. The defaulted student loan remains on your credit record and payment must continue until the defaulted loan is paid in full. You must request loan rehabilitation and complete the necessary paperwork.

Rehabilitate your defaulted loan and restore your credit rating by making twelve full consecutive monthly payments within 15 days of the date. The payments must be voluntary and cannot be the result of legal proceedings, wage garnishment, or a lump sum prepayment of future payments. Your monthly payment must pay off the loan within the payment period established by the original promissory note. Most student loans must be paid within ten years from the date the loan entered repayment, excluding any periods of deferment. Once your loan is rehabilitated a lender may repurchase the loan; the default rating will be removed from your credit records and you will regain eligibility for federal student aid.