If you are in school or trying to get back in school they will not give you financial aid until your loan clears. You can choose loan rehabilitation, consolidation, or pay it off in full. It Takes 6 months of 6 consecutive payments to be able to re-instate for financial aid. What they can also do is hold your tax return (if you already do them) and that is called a Tax Offset. They take that money as payment for what you owe. And by they I mean collections because at this point your loan is already in Collections. The Tax Offset is held by the FBE (Federal Board of Eduction) and they take their cut and the rest pays off the remaining fees.
