Student Loan Rehabilitation in New York
What is Student Loan Rehabilitation?
Student loan rehabilitation is an attractive option for those individuals seeking to repair their credit report. This is because loan rehabilitation restores your student loans to their pre-default state and can erase any negative information listed with the three major credit bureaus. This of course will likely raise your credit score, making you a better candidate for obtaining future credit. While student loan rehabilitation is an extremely attractive option for those in default, it is only available once and thus a person must be financially prepared to meet the various conditions.
Learn more about how we can help you by contacting us online or calling (888) 801-7765 today!
How Does Student Loan Rehabilitation Work?
In order to rehabilitation a student loan, the debtor enters into an agreement with the loan holder that defines monthly payment amounts and due dates for a 9-month qualification period. This rehabilitation agreement will set reasonable/affordable monthly payments, often times just 1% of your outstanding balance. Though it is possible to qualify for lower monthly payments, the debtor must demonstrate financial hardship and this may indicate that rehabilitation is too risky a proposition (as it is only available once).
Once the rehabilitation agreement is entered into, the debtor is obligated to make all 9 monthly payments on time (i.e. within 20 days of the due date) and cannot make early/extra payments to attempt to speed up the process. If the debtor fails to fulfill the terms of their rehabilitation agreement, their loans will stay in default.
The rehabilitation process is finalized once a new lender purchases the loan. Although there is no set timeframe for when this will occur, it opens the door to having all negative information regarding those loans removed from the debtor’s credit reports. In addition, all loan information is updated on the National Student Loan Data System website. When this occurs, it makes the debtor once again eligible for deferments, forebearances and Title IV financial aid.
What Types Of Loans Qualify For Rehabilitation?
Unfortunately, only federal student loans qualify for loan rehabilitation. The various types of student loans include:
- Federal Stafford loans (formerly GSL)
- Federal Perkins loans (formerly NDSL)
- Federal PLUS (Parent Loans for Undergraduate Students)
- Federal Grad PLUS (PLUS loans for graduate and professional students)
- Federal Consolidation loans
- Federal SLS (formerly ALAS)
- Health Professions Student Loans (HPSL), and
- Nursing Student Loan (NSL)
What Are The Benefits Of Student Loan Rehabilitation?
There are many benefits associated with the rehabilitation of defaulted student loans, including:
- The termination of all collections activity and legal proceedings,
- The prevention of wage garnishment and seizure of state and/or federal tax refunds,
- The restoration of those student loans to “current” status,
- The restoration of eligibility for deferment, forbearance and alternative repayment plans,
- The restoration of eligibility to apply for additional loans, and
- The potential repair/erasure of negative credit reporting.
Contact Graham & Borgese online or by calling (888) 801-7765 today!