The Benefits of Loan Rehabilitation

Loan Rehabilitation is a unique type of repayment program specifically designed by federal law for defaulted federal student loans.  If your specific loans are eligible, you have the opportunity to “rehabilitate” your loan – that is, to get it out of default status and back into an active repayment status.  Unlike paying the full balance owed or settling your account, you will still have a balance owed on your student loan after you have finished the Loan Rehabilitation Program. 

Loan rehabilitation is a one-time opportunity.  That means that after you complete the Loan Rehabilitation Program for a loan, that particular loan is no longer eligible to be rehabilitated in the future if it ever goes back into a default status. 

Loan rehabilitation may be appealing to you because of the benefits it offers:

  • Your loans will no longer be in default status.
  • Your loan holder will request that all consumer reporting agencies remove the default status from your consumer credit report.
  • You may regain eligibility for remaining deferments, forbearances, and other financial aid benefits under Title IV of the Higher Education Act.
  • Administrative Wage Garnishment orders issued by your loan holder will be released.
  • The U.S. Treasury Department and your loan holder will no longer seize and apply your federal income tax refund to the balance owed on your student loan.

Do you want to learn how Loan Rehabilitation works?  To find out more, click on the button below for the holder of your federal student loan.  If you are unsure who holds your student loan, click on “I Don’t Know.”

My loan holder is: