Best education loan : Look to Rehabilitation to Recover from Student Loan Default

1. Best Education loan

2. Look to Rehabilitation to Recover from Student Loan Default

3. There are enough lower payment, deferment and other options available for federal student loan borrowers that one would hope defaults on these loans would be a rare occurrence. • Unfortunately, statistics show that more than 14 percent of federal student loan borrowers who left or completed school in 2010 and more than 18 percent of loans for students who left or completed school in 2008 had defaulted by 2014​. • The numbers get grimmer when you start looking at individual school types, with some having lifetime default rates as high as 40 percent.

4. Rehabilitation • If your credit score is a priority, rehabilitating your defaulted student loan may be a good choice. • Under this option, the borrower agrees to a reasonable payment amount with the loan holder and makes that payment on-time for nine consecutive payments.

5. The Fine Print • Like many student loan rules, there are a few details of rehabilitation you need to be aware of. • First, these federal loans​ can only go through the rehabilitation process once per loan unless the prior rehabilitation occurred before Aug. 14, 2008. • Also, if you miss a payment during the process, you'll most likely be required to start all over again. • A borrower can become eligible for additional federal aid after the sixth on-time payment, but will lose it again if they miss future payments or don't complete the rehabilitation process.

6. A Word of Caution • While the current rehabilitation rules help make it easier for borrowers to take advantage of the program, it's not necessarily a good idea for everyone. A borrower who has to use the financial hardship form to find an affordable payment amount may be laying a path for failure down the road.

7. Consider Consolidation • If rehabilitation is not an option, consolidation could be. Defaulted federal loan borrowers can generally have their loans released for consolidation after making a short satisfactory repayment agreement with the loan holder. • This could take some additional time if the loan is under administrative wage garnishment or litigation.

8. Pay In Full • While not an option for most borrowers, paying the loan in full is another way to resolve a defaulted student loan. • The Best Education loan will show as paid in full on the borrower's credit report, but will still show the past default and delinquencies for the normal credit history time frame. • While there is no guarantee, paying the loan in full may allow the borrower to request a reduction in collection costs. • Source: http://bit.ly/1RIlpZQ

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