Defaulted Federal Student Loans - Rehabilitation

Hopefully you have read our blog titled “Defaulted Federal Student Loans – Consolidation and Other Options.” This blog focuses on borrowers who desire to cure their defaulted federal student loans through a process called rehabilitation.

Rehabilitation requires you to agree to a repayment plan. Typically, you must make nine payments within a ten month period. Your student loan will only be considered rehabilitated after you have voluntarily and timely made the agreed-upon payments and your loan has been purchased by a lender. It is important to understand that payments that are involuntarily taken from you (through an administrative wage garnishment or other collection actions) do not count toward your rehabilitation payments.

There are numerous benefits to rehabilitating a student loan, including:

  • Removal of the default status on your loan
  • You regain eligibility for benefits such as deferment, forbearance, consolidation (if you previously had an administrative wage garnishment prior to the rehabilitation), repayment plans and loan forgiveness
  • Removal of the default notation on your credit report
  • Administrative wage garnishment will stop after a certain number of payments
  • Any income tax refund from the IRS will no longer be withheld
  • You may be eligible to receive additional federal student aid

Please keep in mind that every student loan matter is different. If you are interested in learning more about rehabilitation of defaulted student loans and you would like to schedule a no-cost consultation, please contact our office by completing the form on this website or calling us at (954) 280-5066.

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