Loan Rehabilitation

Student loan rehabilitation allows you to remove your loan from a default status.  Here’s what you need to do:

  1. Ask your loan holder to rehabilitate your loan.
  2. Agree to a reasonable and affordable repayment that is satisfactory to the loan holder.
  3. Make monthly payments that are on time, voluntary, full, and consecutive under that repayment arrangement.

Benefits of loan rehabilitation

  • Your loan holder deletes the negative information they supplied to your credit report, and you are no longer considered in default.
  • If you still meet the other requirements, you can get deferments on your rehabilitated loan, as well as forbearance and alternative payment plans.
  • You can get federal financial aid again if you meet the other eligibility requirements.

Other facts

  • You may only rehabilitate a loan once. If you rehabilitate and then default, you will not have the option on that loan again.
  • You have to make your payments on time every month. If you're late or miss even one payment, you haven't rehabilitated your loan and have to start over again.
  • Lump sum payments won't be counted as separate monthly payments.
  • Any payments on your account resulting from tax offset or wage garnishment don't count towards rehabilitation, because they aren't considered voluntary.
  • If collection costs have been applied to your loan, they may be capitalized (added to your principal balance).