Student loan rehabilitation allows you to remove your loan from a default status. Here’s what you need to do:
- Ask your loan holder to rehabilitate your loan.
- Agree to a reasonable and affordable repayment that is satisfactory to the loan holder.
- Make monthly payments that are on time, voluntary, full, and consecutive under that repayment arrangement.
Benefits of loan rehabilitation
- Your loan holder deletes the negative information they supplied to your credit report, and you are no longer considered in default.
- If you still meet the other requirements, you can get deferments on your rehabilitated loan, as well as forbearance and alternative payment plans.
- You can get federal financial aid again if you meet the other eligibility requirements.
- You may only rehabilitate a loan once. If you rehabilitate and then default, you will not have the option on that loan again.
- You have to make your payments on time every month. If you're late or miss even one payment, you haven't rehabilitated your loan and have to start over again.
- Lump sum payments won't be counted as separate monthly payments.
- Any payments on your account resulting from tax offset or wage garnishment don't count towards rehabilitation, because they aren't considered voluntary.
- If collection costs have been applied to your loan, they may be capitalized (added to your principal balance).