How to Get a Resolution to Rehab Your Student Loans
A defaulted student loan can turn into a financial nightmare if it is not resolved. Wage garnishments, claimed tax refunds, court appearances and a damaged credit score are all possibilities. Working with the company holding your loan to reach a resolution to rehab your student loans is essential. Student loans cannot be removed through bankruptcy, but most lenders--to avoid non-repayment--will agree to a repayment schedule. Federally held student loans, which are the most common, are eligible by law for one loan rehabilitation.
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Instructions
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Gather your loan paperwork, stating how much you owe, your case or account number, and who is holding your loan--the company you must repay. Write the most important information down on a separate piece of paper for easy reference. This should include the loan amount, account number and the phone number to call to discuss options for your loan.
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Contact the company holding your loan. Have the paperwork beside you, as well as a blank sheet of paper and a pen or pencil. This is the hardest step, especially if you have been putting this off for any length of time. However, it is the only way to rehab your loan.
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Discuss repayment options with the customer service assistant. If you are going to have difficulty repaying because of financial hardship, ask for lower payments. If you have a federally guaranteed loan, there is no minimum payment amount, although you may be asked to prove your income. The U.S. government has an income-based repayment program that can make payments much more manageable for low-income individuals and families. It may be harder to come to a rehab agreement with a private loan company. The sooner you contact the company, the better your chances for reaching a resolution. Once an arrangement has been agreed upon, a written agreement should be mailed out for you to review, sign and return.
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Review the written agreement when it arrives. Make sure that the agreement you arranged over the phone is clearly detailed in the document. Make sure the amount due every month is included, as well as which day the payment is due. The agreement should also state the conditions for having the loan reinstated, such as nine on-time payments in the course of 10 months. If you have any questions, call the loan company prior to signing. If you do not receive a second copy, make a copy for yourself. Sign and return the agreement. You may be asked to send your first payment at this time.
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Make your monthly payments on time. If you have trouble remembering to make the payments, see if there is an automatic bill pay option. The amount due will be automatically deducted from your bank account on the same day each month, removing the worry of late or missed payments. After several on-time payments--it varies between eight and 12 months depending on company--your loan will be rehabilitated. Once your loan is no longer in default, you still need to continue to make payments to keep it current.
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