In a perfect world, you'd be able to make your student loan payments on time every month. In fact, you'd pay extra.
But in reality, all of us can find ourselves with less cash than we need to pay the bills. If you've been struggling for long enough that your student loans are in default, you're probably looking for a way to get back into compliance with the terms of your repayment plan. Student loan rehabilitation may be your answer.
What is student loan rehabilitation?
Can it get me out of default?
How does it work?
What are the pros and cons of rehabilitation?
- Your default will be removed from your credit history.
- If you complete the plan, you will no longer be in default.
- You will have an opportunity to get out of default while making payments that are likely smaller than your previous payments.
- After completing the rehabilitation plan, you will have access to federal benefits, like forbearance, deferment, loan forgiveness, and varied repayment plans.
- Your late payments will remain on your credit history.
- You may have difficulty affording the full payments once your rehabilitation plan ends.
- You may have to pay up to 16% of your loan balance in collection costs. The Department of Education is authorized to charge collection costs from borrowers in default.
- You may only rehabilitate a loan once.