Consolidating Defaulted Federal Student Loans: Conditions
Guides · Updated October 17, 2026 · 2 min read
General information, not legal, tax or financial advice. We are not the U.S. Department of Education or the IRS and have no access to your loan account. Check StudentAid.gov. Sources read October 17, 2026; items marked expected may change. Examples use made-up numbers. This page contains no affiliate links.
Short answer: 34 CFR 685.220(d) allows a borrower in default to obtain a Direct Consolidation Loan only if they have made satisfactory repayment arrangements under the definition in § 685.102(b), and are not subject to an unvacated judgment or an unlifted wage-garnishment order. For a defaulted Direct or FFEL loan, collection costs charged to the borrower are limited to a maximum of 18.5% of the outstanding principal and interest.
Specific points
- A defaulted Federal Consolidation Loan can be consolidated again without extra loans if, before July 1, 2028, the purpose is to get an income-contingent or income-based plan, or on or after July 1, 2028, to get the Repayment Assistance Plan (RAP).
- A borrower with a Federal Consolidation Loan can consolidate it into the Direct Loan Program for PSLF or the active-duty interest benefit.
- The holder of each loan must certify the amount owed within 10 business days or explain why it can't.
- For any other defaulted federal education loan, all collection costs owed may be charged.
Illustration (made-up)
Defaulted principal and interest of $20,000: the 18.5% cap would be $3,700 of collection costs at most, if the cap applies to that loan type. Actual amounts come from the servicer or Default Resolution Group.
What to do next
Contact the holder of your loans and check StudentAid.gov. This page doesn't cover rehabilitation or settlement.
Related
Direct Consolidation basics · RAP explained
FAQ
What counts as satisfactory arrangements?
The definition is in § 685.102(b), which we did not read.
Does consolidation remove the default?
Not stated in the passage read.
What we could not verify
- The definition of satisfactory repayment arrangements (§ 685.102(b)) and whether consolidation removes the default record.
- Rehabilitation, Treasury offset, wage garnishment rules.
- StudentAid.gov default pages (not readable by our tools).
- The 2028 dates come from the regulation as read and may change.
Sources
- eCFR, 34 CFR § 685.220 Consolidation (current text, amended through 91 FR 23900, May 1, 2026) — https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-685/subpart-B/section-685.220 (read October 17, 2026)