The student loan rehabilitation program gives borrowers an opportunity to dig their federal student loans out of default by making nine monthly payments over 10 consecutive months. It also removes the default status (but not the late payment history) from their credit reports and stops collection activities.
The student loan rehabilitation program lets borrowers bring their federal student loans back into good standing after they make nine monthly payments. Out of the three options available to manage default, it’s the only option that erases the default status from credit reports. It does take three times as long as settlement and loan consolidation to exit default using this program
Ahead, learn all about the federal student loan rehabilitation program, including what happens after you complete it and how it impacts your credit score.
Resources for student loans in default
***The Education Department announced the payment pause would be extended until August 31, 2022. The department added that it would grant more than 7 million borrowers in default a “fresh start” and automatically return their accounts to good standing before the freeze ends. There’s no word yet on when this change will happen. Read more about the Fresh Start student loan program.