Loan rehabilitation.

In plain English

Loan rehabilitation is a federal program that lets you bring a defaulted student loan back to good standing by making a series of voluntary, on-time monthly payments that your loan holder agrees are reasonable based on your income. For Direct and FFEL loans that means nine payments made within ten consecutive months. Default means you fell far enough behind that the full balance became due and collection began. Once you finish the rehabilitation payments, the loan is no longer in default, the default record comes off your credit report, and you regain access to repayment plans and future federal aid. You can only rehabilitate a given loan one time. The first step is to contact your loan servicer or the default-collection office listed on studentaid.gov and ask for a rehabilitation agreement.

01Why it matters

Default can trigger wage garnishment and seized tax refunds, and rehabilitation is one of the few ways to stop that and rebuild your credit. It is not hopeless, and there is a defined path back.

02The math, step by step

Say you defaulted on a federal Direct loan. Your servicer sets a rehabilitation payment based on your income. You make nine on-time payments across ten consecutive months, and once you finish, the loan returns to good standing and the default mark is removed from your credit report.

03What this is NOT

04Receipts

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