Us department of education loan rehabilitation program

I spoke to a mortgage broker who told me that you could make additional payments equal to the monthly payments on the weeks that they are not on auto-withdrawal. He said that this way, you could get it taken care of in 9 weeks rather than 9 months.

You would have to call to confirm this. The program has rules specifically crafted to prevent this sort of thing. Save my name, email, and website in this browser for the next time I comment. By: Tim Marshall Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in , where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.

Tyanna March 6, Tim Marshall March 21, Debra Morris February 21, Dustin January 6, Tim Marshall March 27, Bruce Gooden April 19, Tim Marshall April 19, Hi Bruce, You have to sign your taxes before you send them to the IRS, so all you need to do is make a copy of the important pages, including the one where you signed it, and then provide that to your servicing company. Jill Hathaway March 28, Tim Marshall April 5, Jessica March 28, Hello, i am in a loan rehab agreement and have made 2 payments so far.

Tim Marshall April 8, Hi Jessica, They might have already earmarked your return to be taken before you got all the rehab program paperwork handled. Bradley askvig March 18, Tim Marshall March 19, Good luck! Beth March 13, Tim Marshall March 17, Jennifer March 12, Kimber February 27, Tim Marshall March 18, April February 5, Can you make the 9 consecutive payments at once to quickly get your loans out of default? This plan does not take into account your actual expenses but instead makes an assumption of expenses based on poverty guidelines for your state of residence and family size.

Calculation of Affordable Payment Amounts: Your payment amount is calculated using your monthly income and expenses. Unlike Option A, here your actual monthly expenses are taken into consideration. Option B might be a better solution for you if you have higher monthly expenses or special expenses, such as other student loan payments or wage garnishment withholdings.

However, you will need to complete the rehabilitation to get out of default. The Department of Education says that it does not charge these fees to borrowers rehabilitating Direct Loans, but the they will charge fees against each of the nine qualifying payments.

Once full eligibility for rehabilitation has been achieved, only the principal and interest balance of the loan is transferred to a non-default servicer. This policy could change, so it is a good idea to ask about whether the government is going to add collection fees to your balance after rehabilitation.

You are entitled to get out of default through rehabilitation only once per loan. If you rehabilitated before August 14, and go back into default on that loan, you can still rehabilitate again. However, this new rehabilitation will be subject to the one-time limit. You will need to request rehabilitation from your loan holder. You will most likely be dealing with a collection agency. In the past, it was very common for collectors to tell you that you had to pay an unaffordable amount.

This was wrong then and is still wrong. The law says that you only have to pay what is reasonable and affordable. There is no minimum amount that the loan holder must charge. The current rules should work much better for borrowers. Here is how the system works under current law: The loan holder should discuss your options, including the pros and cons of loan rehabilitation and loan consolidation.

If you decide on rehabilitation, the loan holder should start out with the amount you would pay under the IBR formula. This does not mean that you are eligible for IBR while you are still in default. If you successfully rehabilitate a Direct loan, you can then request one of the other income-driven repayment plans.

The loan holder will make an initial estimate of your reasonable and affordable payment based on the information you give them about your income. You will likely have to follow up and provide documentation of your income in order to get the rehabilitation started. If you do not file taxes or if your most recent tax return is no longer accurate, you will need to submit alternative documentation of income.

This is your choice. You do not have to make this payment. However, you may want to do this so that you can get started with the nine month rehabilitation period. The loan holder can ask you to provide documentation of income and expenses.

If you make this choice, be advised that your payment will likely increase after the rehabilitation period. At that point, you can request deferment if you qualify or forbearance if you cannot afford the post-rehabilitation payments, but these are time limited options.

Within 15 days of the determination of the reasonable and affordable payment amount, the loan holder must give you a written rehabilitation agreement which includes the payment amount and other required information sample written rehabilitation agreement. If you want to accept the agreement, you must sign and return it or accept it electronically.