student loans in default

Call your lender once again and explain that you are already having problems with the existing plan. Offer them what you can afford and get the arrangement done in writing. The interest rates will go higher on every default. You need to fix up something at the earliest. Have you thought about forbearance?

Loans in default can't be put in forbearance. If your loans are in collections, your best option is to rehabilitate them. There is another thread on rehabilitation in this topic.

Call the collection agency back and tell them you want to rehabiliate. By law,you are entitled to "reasonable and affordable" payments. After 9 on time monthly payment, the loan can then be sold to a lender and it becomes current. Alternatively, consolidate your loan. The Direct Loan program offers an "income contingent repayment plan" that is geared to income.

It's actually 12-15 timely monthly payments, but the rest of your details are right on the money. No pun intended.

No it is not 12-15 payments to rehab. The laws changed July 1, 2006 and it is now 9 payments to rehab a stafford or PLUS loan. Perkins loans remain at 12 payments.