I am going to be away from tomorrow (Friday) until Monday, and I do not want you delayed in a response.
Your loan is most likely serviced by American Education Services (AES), they also go by Fed Loan Servicing (FLS). They are the largest servicer of student loans. There are other servicers also, but they also use the AES platform.
Once a loan goes into default the servicer is generally not terribly interested in helping you because the lender gets paid on the federal guarantee. However, you are entitled to have your loan "Rehabilitated." A loan is rehabilitated when you bring it up to date by paying the arrearages. The servicer will then set up a new loan payment plan for you.
If you can not afford to rehab the loan, do not worry. You still have remedies. The remedies may seem counter-intuitive, but because you are dealing with the federal government the programs have a few quirks.
Normally, when you default on a loan the lender sues to get a judgment and then garnishes your assets to satisfy the debt. But the federal student loans are not the normal situation. Under the federal programs when you default, they must initiate collection litigation and obtain a judgment. BUT if a judgment is taken against you the maximum that can be taken from your income in a garnishment is 15% of your net disposable income. Your net disposable income is your income, less taxes, less ordinary living expenses, like rent, utilities, car payment, health insurance, etc.
Additionally, when the garnishment order is issued, you are entitled to a hearing before a hearing examiner. The hearing examiners routinely reduce the garnishment to 10% of your net disposable income. So when you get the garnishment notice ask for the hearing. The hearing take place over the phone so you do not have to travel to them.
Also VERY important, if you are on any type of financial assistance (food stamps, welfare, SSI) the hearing examiner will deny the garnishment and set a new hearing in a year to revisit your financial situation.
So the good news is that in the very worse case you will be looking at paying 10% of your income after your normal living expenses are deducted. For example say you receive $2000 per month. Subtract taxes, rent, utilities, health insurance, car payment, (even basic cable), and your net disposable income is $500.00. The maximum garnishment is between $50.00 and $75.00 per month. If you are on assistance the garnishment will be zero.
If you still would like to discuss this I may be available tonight. Otherwise I will respond Monday (Perhaps Sunday night if I get home early).
I hope the information I have provided is useful to you. I want you to be comfortable and satisfied with my attempt to assist you.
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