Rehabilitation is when your loans are taken out of delinquency or default status. If your lender grants deferment or forbearance, then your loans are rehabilitated.
You may renew eligibility for your defaulted loan by:
- Coming up with a reasonable and affordable monthly payment based on your total financial circumstances; and
- Making 9 monthly payments within 15-20 days of the payment due dates in a 10 month period.
You can submit your application for rehabilitation to the agency servicing the loan. You and the agency should work out acceptable terms.
If the agency is demanding a $50 minimum, or stating that the loan must be paid immediately and in full, this may be a violation of the Fair Debt Collection Practices Act and you may be able to sue for damages and fees. Talk to a lawyer if this is true.
If a loan servicer is not acting reasonably in setting a repayment plan, you should call the Department of Education's Ombudsman Program at (877) 557-2575 or send an e-mail to firstname.lastname@example.org. Letters can be mailed to:
U.S. Department of Education
830 First Street, N.E.
Washington, D.C. 20202-5144
Updated: June 2017