Consolidating federal student loans information

Posted by / 10-Dec-2019 07:57

When your loan is rehabilitated, the default status will be removed from your loan, and collection of payments through wage garnishment or Treasury offset will stop.You’ll regain eligibility for benefits that were available on the loan before you defaulted, such as deferment, forbearance, a choice of repayment plans, and loan forgiveness, and you’ll be eligible to receive federal student aid.Learn more about loan rehabilitation and loan consolidation.Unless you make three voluntary, on-time, full monthly payments on a defaulted loan before you consolidate it, your choice of repayment plans for the new Direct Consolidation Loan will be limited to one of the income-driven repayment plans.You’ll need to provide documentation of your monthly income and expenses, including a completed form.Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered.To rehabilitate a defaulted Direct Loan or FFEL Program loan, you must Under a loan rehabilitation agreement, your loan holder will determine a reasonable monthly payment amount that is equal to 15 percent of your annual discretionary income, divided by 12.

Your loan holder may be collecting payments on your defaulted loan through wage garnishment or Treasury offset (taking all or part of your tax refunds or other government payments).

If you failed to make your payments on your federal student loan and now are in default, don’t let the consequences of default affect your financial future. Loan Rehabilitation Loan Consolidation Repayment in Full Getting Help With Your Defaulted Loan One way to get out of default is to repay the defaulted loan in full, but that's not a practical option for most borrowers.

The two main ways to get out of default are loan rehabilitation and loan consolidation.

If you make three voluntary, on-time, full monthly payments before consolidating, you can choose from any of the repayment plans available to Direct Consolidation Loan borrowers.

One option for getting your loan out of default is loan rehabilitation.

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While loan rehabilitation takes several months to complete, you can quickly apply for loan consolidation.

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