What is Student Loan Rehabilitation?

When you’ve defaulted on your federal student loans, there is a one-time opportunity to qualify for loan rehabilitation. Unfortunately, there isn’t a second chance with this, so if you default on your loan again, you’re ineligible for rehabilitation of your student loan.

Student Loan Rehabilitation and Default Removal

You, the individual, are the borrower, the person who took out the federal student loan and, or private student loan. When you’ve defaulted on your debts, but made upwards of 10 monthly payments, you’re eligible for a loan rehabilitation program.

Very important: Your payments must be made on time. How is that defined?

  • Within roughly two-weeks of the payment due date.

The rehabilitation Federal Family Education Loan Program (FEEL) needs your loan to be sold to a lender after you, the borrower, complete all tasks required for student loan rehabilitation. Typically, it takes between 30-90 days for the default to be removed from you, the borrower’s credit report.

Realistic Payments and What That Mean for you

If you, the borrower are in financial duress or you’re on welfare, receiving social security, Veteran’s benefits, or workmen’s comp, you’ll need to prove your income and expenses. Upon completion, your monthly payment will be based on what you can realistically afford. The amount differs for everyone. If you’ve never seen an income and expenses report for this particular program, please review this:

Good Faith Payments

Good faith payments are separate from regular payments and wage garnishment payments. If the lender or agency is overseeing your account, speak with them about making good faith payments and how that will impact your ability to qualify for student loan rehab and out of default.

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