Student Loan Rehabilitation Program

Explore your options for student loan rehabilitation before your loans go into collections, wage garnishment occurs, your credit history is affected and your debt takes control of your financial freedom.

If you have student loans in default and want to get your payments back on track, rehabilitating your student loan can help you regain your financial footing and repair relationships with your lenders.

How to Qualify for Student Loan Rehabilitation

Student loan default occurs when you’ve missed monthly payments on your student loans for more than nine months (270 days). Once your student loans are in default, recovering these loans can be difficult, but there are a few ways you can get out of default for good.

One of the best options for getting out of default is through student loan rehabilitation. To qualify for rehabilitation, you must have defaulted loans that fall under the William D. Ford Federal Direct Loan (Direct Loan) or Federal Family Education Loan (FFEL) Programs or is a defaulted Perkins Loan.

Finding out if you qualify for student loan rehabilitation is usually a quick and easy process. It involves contacting your loan servicer directly, or learning more about your options from a student loan expert at The sooner you take care of your student loans, the sooner you’ll be in a better place financially.

Find out if you can rehabilitate your student loans today.


How Student Loan Rehabilitation Works

If you have student loans that qualify, your next step is to sign a new written agreement with your lender. In most cases, this will involve making nine voluntary on-time payments within 20 days of the scheduled due date each month. All nine payments will need to take place consecutively within a 10-month period.

The amount you pay each month will depend on your discretionary income. Your loan servicer will usually calculate monthly payments based on 15 percent of your annual discretionary income and break this amount into 12 payments for the year. Discretionary income is determined by subtracting 150 percent of your state’s poverty level, which is based on your household’s size, from your household’s adjusted gross income (AGI).

If you’re unable to make payments under these new terms, your loan servicer may agree to an alternative monthly payment plan based on the money you have left over each month after paying other monthly expenses. Depending on your situation, this new amount could be much lower than the original student loan rehabilitation agreement.

Benefits of Student Loan Rehabilitation

During the nine-month period when you’re making payments on your rehabilitated student loan, any wage garnishments or Treasury offsets may continue until the period has ended. None of these involuntary payments will go towards your rehabilitation agreement. However, once the nine-month period is complete, your student loans will be considered out of default, and any wage garnishment or offsets will stop immediately.

With your student loan out of default, you will reestablish your eligibility for other types of loans and programs, including:

Your rehabilitated loans will also open opportunities to secure new student loans in the future. It also means that phone calls from collectors will stop and your credit history will have the defaulted status of the loan removed.

Please note, however, that student loan rehabilitation is only available one time. This means that if you default on your new rehabilitation agreement, you won’t be able to repair it a second time.

For more details on student loan rehabilitation, speak with student loan specialist by phone at 800-771-6358.