Active duty military personnel are allowed to interrupt the 10 month consecutive period and then pick it up again after they come back from active duty, but everyone else has to abide by the 10 consecutive months requirement. First, everything I wrote above in the Quick Explanation still applies, but now, let me add a few details to the process so that you can understand all the little nuances of how this rehabilitation thing works:.
One interesting thing about the loan rehabilitation process is that there are some slight differences in the way it works for different Types of Federal Student Loans, so before you start your rehab, make sure to review the following list of loan types to determine exactly how your rehabilitation will go. After an FFEL loan rehabilitation, the loan guarantor is required to find a buyer for the loan, which means that they need to transfer ownership of your loan from themselves to someone else, typically one of the big Federal Student Loan Servicing Companies.
Some people have reported waiting weeks, or even months for their new servicer to be arranged, but be aware that this process is supposed to be handled quickly and make sure that your collection agency is aware that you know these rules, otherwise they may try to drag their feet. Have questions about any specific parts of the student loan rehab process? Maybe, but it depends. Private Lenders can do whatever they want with defaulted loans, and while some of them do offer rehabilitation programs, this is relatively rare.
Make sure that the lender knows that you know this, because some of them will push people around and try to get away with charging extra amounts. If the lender continues to give you trouble over this issue, try contacting the Student Loan Ombudsman Group at the Department of Education to ask for their assistance.
This is a free service provided by the Federal Government who can advocate on your behalf. Why would you want to do this? Finally, make sure you also visit the official Department of Education website devoted to helping student loan borrowers get out of default, as this is one of the best resources on the web for assistance with this problem. Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in , where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.
My loans went into default after rehabilitation program. I was not aware of the next step. Now they are taking my taxes what can I do? Contact your servicer and see if you can get back out of default. Tim, thank you for all of the great info, it is appreciated. I am in a loan rehab program. My loan servicer made an admin error resulting in my initial 5 payments being lower than they should have been. They then told me that if I make at least 3 payments at the higher amount and 9 out of 10 consecutive payments, they could file for an exception by admitting an administrative error and requesting the DoE accept the payments that were at the lower amount.
Do you know if this is possible or have I been lied to? Another way to lessen the increase of student loan default rates is student loan consolidation. When getting your loans out of default, student loan rehabilitation is preferred over student loan consolidation. On the other hand, consolidating loans in default retains the default record in your credit history. The Income-Driven Repayment plan is usually what borrowers go for, because it is the most affordable.
Watch this video from the Wall Street Journal for more information on student loan default rates:. It may be daunting at first, but student loan rehabilitation may be the answer you have been waiting for. What are your thoughts on the student loan default rates? Let us know in the comments below. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment.
Only federal student loans are eligible for rehabilitation. These include: Federal Stafford These include:. Rehabilitation has important limitations and rules To rehabilitate your defaulted loan s , contact ECMC at Our hours To expedite a discussion of rehabilitation payment options, have your most recent federal tax return available when you call.
Call us Send via U. Box St. Send an Email. Paul, MN Email us. Order Opportunities Booklets. Call us Email us. Call us Email us Send an Email. All rights reserved. The rehabilitation process takes 10 consecutive months where you have to make 9 voluntary, monthly, and on-time payments within 20 days of the due date.
Once you complete these payments, your student loan will once again return in good standing. Another benefit is that after these 10 months, you are eligible for income-driven repayment plans to help you manage your monthly payments or you can also apply to temporarily postpone the payment collection through loan deferment or forbearance.
If you think that loan rehabilitation is the best option for you, follow the steps outlined below to apply for the program. A student loan typically enters default after to days of non-payment or 9 to 11 months.
A loan is delinquent once you miss a single payment but these are usually reported to credit bureaus after 90 days of non-payment. If you have a delinquent loan, you can still retroactively apply for loan deferment or forbearance to postpone the payments.
You can check this information with your loan servicer. You can also log in to this website to view your loan servicer details and get their contact information. When agreeing to the payments, make sure that you have the capability to meet the amounts set to successfully complete the loan rehabilitation in 10 months. The rehabilitation payments must be voluntary payments so that money should be outside what is already being garnished automatically.
Remember that your goal is not only to get out of default but to not suffer a default once again. For you to do this successfully, you have to make sure that you can make all succeeding payments once your student loan is already out of default.
Having this information will help you determine whether you need to either save money in advance to make the monthly payments or apply for a deferment or forbearance to postpone the payments. After agreeing to a loan rehabilitation plan, meet all the payments on time.
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