Student Loan Rehabilitation is not a phrase you like to hear when talking about college loan repayment, because it suggests that the repayment part hasn’t been happening and the loans have gone into default. If a student has not made monthly payments, and the loan holder has made a good faith effort to make contact and collect on the loan, then after 270 days, the loan may be placed into a default status.
Once in default, several things may happen. The loan may be “accelerated”, which means that the entire loan, including principal and interest becomes due in a single payment. Also, you will no longer entitled to any deferments or forbearance. If you are in default on any Title IV student loan, you will not be eligible for any additional Title IV federal student aid until you have made at least six consecutive months of acceptable payments.
Next, the guaranty agency will attempt to get payment in several ways. State and federal income tax refunds may be taken as well as a portion (15%) of any Social Security benefits that may be involved. If you are a Federal employee, they may garnish 15% of your disposable pay directly. Private employers may […]

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