Student Loan Rehabilitation
Quality education is becoming more and more expensive. The tuition fees and living expenses of higher education students are such that most students cannot afford these costs on their own or even with the help of their family’s financial resources. In such situations, a large number of students resort to financial aid options and student loans to enable them to pursue their educational goals. While aid options such as grants and scholarships are essentially gifts of money and don’t need to be paid back, loans money must be returned with interest after graduation. Although most students are able to pay off the loans they have obtained for their education with ease (as such loans are usually designed to accommodate students), there are sometimes cases of default.
Students who have defaulted on their student loan can use student loan rehabilitation to rehabilitate student loans and reverse the negative consequences of defaulting. Student loan rehabilitation is a federally authorized program that provides federal student loan debtors a means to bring their loans out of default. Under this program, borrowers must make 9 timely student loan repayments. Once this is completed, the guarantor transfers the loan to a lender and servicer. From this point on, the loan is considered out of default and back in repayment. In fact, after completing student loan rehabilitation, students become eligible for financial aid once again.
To avoid situations that may lead to default, students who opt for private student loans must ensure that they choose loans that are best suited to their individual financial situation. They should resort to private loans only after all other aid options have been exhausted. This is due to the fact that private student loans have tougher repayment options and higher interest rates than federal student loans.
If you are planning to apply for a private student loan, make sure you conduct a thorough search to find the best loan option for yourself. You should consider all available options and compare the terms of various private loans to see if they suit you. Our Student Loan Comparison Tool helps you do this. Use it and make sure you choose the right option. It’s fast, accessible, easy-to-use and absolutely free!
What is meant by student loan rehabilitation?
Rehabilitation is an effort to change a student loan from default status. To rehabilitate a defaulted student loan, the borrower needs to make at least nine voluntary monthly payments during a 10-month period. After this has been done successfully, the lender deletes its report of the default to all national consumer reporting agencies. Some lenders go as far as removing the default status from the previously defaulting borrower’s credit report.
What is rehabilitate student loan?
Rehabilitate student loans are opportunities for students to gain eligibility to apply for federal loans. According to federal financial aid eligibility requirements, students cannot apply for loans if they have previously defaulted. With the rehabilitate option, students get an opportunity to apply for federal loans again. It is important to note that students can take advantage of this option only once.