Department of Education pays the collection agency a commission, also called a contingent fee, on any payments it can collect from you. Department of Education will give you several chances to get caught up on your student loan payments before referring your account to a debt collection agency. If your federal student loan payments are past due, the U.S. What Are Student Loan Collection Charges? Not only can the process damage your credit, but you’ll also be on the hook for the cost of collection charges on your own debt. Department of Education can refer your account to a debt collection agency. Once you have made the required payments, your loan(s) will continue to be serviced by the Department until the balance owed is paid in full.If you’re struggling to make payments on your federal student loans, the last thing you want is to default. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. To rehabilitate a Perkins Loan, you must make nine (9) on-time, monthly payments of an agreed amount to the Department. Once you have made the required payments, your loan(s) will be returned to loan servicing. To rehabilitate a Direct Loan, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the U.S. Wage garnishment ends and the Internal Revenue Service no longer withholds your income tax refund. This may include deferment, forbearance, and Title IV eligibility.
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