If you default on your federal student loan, the loan may be placed with a collection agency, which will then contact you to obtain payment. 
If you default on your federal student loan , the entire balance of the loan principal and interest becomes immediately due. This is called acceleration. Once your loan is accelerated , you no longer have access to deferment or forbearance options or to a choice of repayment plans. In addition , if you do not make repayment arrangements with the holder of your loan the U.S. Department of Education ED, a guaranty agency, or the school that made the loan and comply with the terms of the repayment arrangement , your loan holder may place your loan with a collection agency. If your loan is placed with a collection agency , you will be responsible for costs incurred by your loan holder to get payment. These costs amount to 17.92% of your loan amount if your loan is held by ED. Other loan holders may charge a different amount. You should check with them to find out what it is. The 17.92% is payable in addition to your outstanding principal balance, interest, and fees. For example , if you owe ED $10,000 , you ll owe an additional $1,792 in collection fees once your loan goes to a collection agency, for a total of $11,792 : 17.92% = 0.1792 $10,000 x 0.1792= $1,792 $10,000 + $1,792 = $11,792 The holder of your loan can take other actions to collect as well. ED currently contracts with several collection agencies to administer many of the collection activities of our accounts. Many guaranty agencies also contract with collection agencies for the same reason. Collection agency employees are trained to comply with the terms of the Fair Debt Collection Practices Act, which govern collection practices by debt collectors. If your defaulted loan is placed with a private collection agency , you can expect the agency to first offer you the option of entering into a voluntary repayment agreement. If you do not agree to enter into a voluntary 

user: Are there additional costs that I would have to pay if my student loan was handed to a collection agency?

assistant: Are you currently in default with your student loan?

user: Yes, I have fallen into arrears on my loan and am fearful that it will be handed over to a collection agency

assistant: If a collection agency is involved, you will liable for any of the costs involved in handing over the loan. The costs involved are equal to 17.92% of your outstanding balance, this amount includes principal, interest and fees

user: I have heard that some people have been told that their loans can be taken out of default for a fee. Is this true?

assistant: The best advice in this instance is to ignore this. Your loan can be taken out of default for free through the Default Resolution Group

user: Am I notified when a Treasury Offset is about to happen with my Student loan? 

assistant: A notice of intent to offset your loan will be sent to your last known address. This notice will inform you that the offset will begin in 65 days. Normally, this correspondence will only be sent once

user: Is there any way that I can contact the Collection Agency involved with my Student Loan?

assistant: The Department of Education currently deals with the collection agencies as they are contracted to do so. A list is available on the website

user: What is the outcome if I don't agree to a repayment agreement on my defaulted student loan?

assistant: In this case, the ED refers your loan to a private collection agency. These agencies earn a commission for any payments that you make on these loans