Look to Rehabilitation to Recover from Student Loan Default - PowerPoint PPT Presentation

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Look to Rehabilitation to Recover from Student Loan Default

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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. – PowerPoint PPT presentation

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Updated: 11 January 2016
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Provided by: rahulsingh20115
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Title: 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

9
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10
Read more on Education Loans
http//www.avanse.com/avanse-education-loans/
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