Student Loan Permanently Assigned to Government

“Student loan permanently assigned to government” is a common issue faced by people which appears on their credit reports. But what is it? Many of us don’t have any information about it.

For the continuation of study, most people take a student loan. This loan needs to be repaid at certain intervals for a definite period. If he/she defaults on that then the various problem arises.

The problem stated above is a part of loan defaulting. It’s very important to remove the status from your credit report otherwise you may suffer in different ways. It’s a common issue that is not talked about.

Here we’ve outlined how you should be able to remove it and also have explained detailed information about student loans permanently assigned to the government. Follow till the last to get a good idea about it.

What’s the meaning of “student loan permanently assigned to government”?

In simple terms, it can be said that if such a report arrives on your credit report then you’re in red danger. The reason is you’ve defaulted on your government-insured loan repayment. The government paid it off but the lender was reassigned.
This student loan is of two types:

  • Private student loan
  • Federal Family Education Loan

If you default on any of those loans then it will appear on your credit report for 7 or more years. Private loan reports will disappear after 7 years if you pay the debt but for FFEL loans the report may remain for another 7 years.

The FFEL loans are guaranteed against the federal government. If a borrower defaults on a loan being 9 months delinquent then the guarantee agency reimburses the lender. The lender then transfers the title to the loan to the government.

The guarantee agency reports all of these to the three credit reporting bureaus. Thus your credit score becomes very low and it will cause a lot of problems in the future. You should work to remove it from your credit report as soon as possible.

Why defaulting on student loans is bad?

Student loan permanently assigned to government
Why defaulting on student loans is bad

Maintaining a good credit score is important. High personnel also emphasize maintaining a good credit score. It becomes extremely difficult to purchase something without a good credit score.

If you default on your student loan then the authority will notify the credit reporting bureaus. As a result, it will be visible on your credit report and your credit score will go down drastically. While purchasing cars or any assets you’ll have to pay extra and still it would be very hard for you to purchase them.

Moreover, they can seize your assets, apartment, etc without any prior notice and no court order. They want their money back which you vowed to give back.

What to do to remove it from the credit report?

Student loan permanently assigned to government
What to do to remove it from the credit report

Every problem has its solution. This is a critical problem so its solution is also complex. To progress yourself having good credit is a must. So, you’ll need to remove the red mark from your credit history. Some of the best ways to remove the red mark are:

  • If you default on your loan then there’s a one-time opportunity to rehabilitate it. Arrangements have to be made to repay the debt. 9 out of 10 consecutive on-time affordable and reasonable monthly payments are required according to the agreement to rehabilitate, that is to remove the default from your credit report.
  • Contact the department of education directly and try to convince them and work a way out of it.
  • Agree on a settlement that includes money.

These are the easiest ways to get out of loan default.


Loan default will reassign the loan to the government but many organizations would be after you to get the money you owe. This is what a student loan permanently assigned to the government means.

This is one of the worst things you’d like to see. Hope this article will be beneficial to you to get deep knowledge about it.

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