Student loan rehabilitation program - how to rehabilitate defaulted student loans and fix credit rating
Student loan rehabilitation program is the only way to deal with defaulted student loans and to fix your credit rating. Nothing else works. If you have missed payments on a student loan, you can enter into a rehabilitation program and get your credit rating on track after making 9 to12 monthly payments on time. Your loan status will be changed to PAY AS AGREED. Basically, this is a federally mandated program allowing you to bring federal student loans out of default, reversing all negative consequences of having a delinquent student loan on your credit report. As the result,
- your loan will no longer be in a default status and you become eligible for financial aid
- the default status on your credit report will be changed to PAY AS AGREED
- the entire outstanding balance of the defaulted loan is no longer due in full
- you will become again eligible for deferment and forbearance
- wage garnishment stops and the Internal Revenue Service no longer seizes your income tax refund
How you rehabilitate your defaulted student loans, depends on what type you have.
To rehabilitate a Direct Loan or FFEL Loan, you must make at least 9 full payments of an agreed amount within 20 days of their monthly due dates over a 10 month period to the U.S. Department of Education. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward these 9 payments. Once you have made the required payments, your loans will be returned to the Direct Loan Servicing Center or will be sold to an eligible lending institution.
Under student loan rehabilitation program for a Perkins Loan, you must make 12 monthly payments on time of an agreed amount to the U.S. Department of Education. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward these 12 payments. Once you have made the required payments, your loan will continue to be serviced by the Department until the balance owed is paid in full.
See other relevant posts -
Chapter 13 bankruptcy and student loans
Student loan dispute - disputing the ownership of a loan
Statute of Limitations on student loans
Cosigning a student loan - a sure way to ask for troubles!
Student loan forgiveness programs
Fri Jan 23, 2009 02:01PM | Copyright: www.bad-credit-advisor.com | More in Student Loans | Comments (0)
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