Guaranty Agency Loan Rehabilitation Programs

We offer at least two different Loan Rehabilitation Programs for borrowers whose loans are currently held by a Guaranty Agency.  Please contact us to discuss your student loan and whether other rehabilitation programs are available from your loan holder.

For simplicity, we refer to the main loan rehabilitation programs as “Option A” and “Option B.”  Importantly, while we may discuss both Options with you, you will need to specifically decline Option A before you may agree to rehabilitate your loan through Option B. 

The following information is applicable to both Option A and Option B Rehabilitation Programs.

Things You Need to Know About Loan Rehabilitation

  • Loan rehabilitation requires you to make a series of installment payments.  You must make a minimum of 9 voluntary, qualifying installment payments on time for the full amount due.  And to be on time, the payments must be received within 20 days of the due date.
  • The payments must be made within a period of 10 consecutive months, beginning with the month of the first payment due date.
  • The Loan Rehabilitation program requires you to sign a Loan Rehabilitation Agreement.  You must provide us with a signed Loan Rehabilitation Agreement.  Additionally, the different types of loan rehabilitation programs require you to provide us with supporting financial documentation.
  • Collection costs, not to exceed 16%, will be capitalized once your loan is rehabilitated. 
  • After you have made the 9 required, timely payments, your loan will be funded and transferred to a new servicer.  You will need to continue making installment payments until your loan is funded and transferred.
  • Once your loan is transferred, you will have to set up a new repayment plan with the new servicer. This may result in payments that are higher or lower than the payments you were making for the Loan Rehabilitation Program.

Option A: 15% Rule Loan Rehabilitation

    Calculation of Affordable Payment Amounts:

    • Your payment amount is calculated using your adjusted gross income and family size.
    • This plan does not take into account your actual expenses but instead makes an assumption of expenses based on poverty guidelines for your state of residence and family size.

    Supporting Documentation Required: You must provide us with documentation of your adjusted gross income and family size. The documentation can be:

    • Your completed IRS Federal Tax Return form from the prior year; or
    • A complete IRS Transcript (using the “Tax Return” option), which is available by searching for “transcript” at

Option B: Reasonable and Affordable Loan Rehabilitation

    Calculation of Affordable Payment Amounts:

    • Your payment amount is calculated using your monthly income and expenses. 
    • Unlike Option A, here your actual monthly expenses are taken into consideration.  Option B might be a better solution for you if you have higher monthly expenses or special expenses, such as other student loan payments or wage garnishment withholdings.

Give us a call.  We can discuss the Loan Rehabilitation program, your options, and help you find the best solution for your student loan.