Subsidized and Unsubsidized Rehabilitation

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Did you know you can rehab a defaulted federal loan?

Subsidized and Unsubsidized Rehabilitation

Defaulting on your federal student loans makes the full amount of the loan due immediately. Most people are not able to pay this right away. So what should you do? There is a way to repair your situation. It is called loan rehabilitation.

By rehabilitating your federally subsidized and unsubsidized student loans, they will no longer be classified as in default, the negative status reported to credit bureaus by the lender will be deleted, and you will again be eligible for benefits like deferment.

In order to rehabilitate your subsidized and unsubsidized federal loans, you must make nine payments of a specified amount, within 20 days of the monthly due date, for 10 consecutive months. Once this has been done, Direct Loans will be returned to the Direct Loan Servicing Center. Loans made through the Federal Family Education Loan Program (FFELP) can be purchased by an eligible loan company. A regular repayment schedule will resume.

You will then be able to apply for further financial assistance from the Federal Government. You should check to see what you are still able to borrow in unsubsidized and subsidized student loans like the Stafford Loan, however, since there are set limits on these.



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