Loan rehabilitation may be a major step towards overall financial health
In addition to removing your loans from default, making them again eligible for applicable forbearance and deferment benefits, the rehabilitation program removes negative remarks placed by ECMC, and restores eligibility for future Title IV financial aid, including federal grants.
To inquire about rehabilitating your defaulted loans, contact your loan holder. If ECMC holds your loans, contact us at 800-367-1589. Our hours of operation are Monday-Thursday, 7 a.m.-9 p.m., and Friday, 7 a.m.–7 p.m., Central time. To expedite a discussion of rehabilitation payment options, you should have your most recent federal tax return available when you call.
If you don't know who your loan holder is, go to the National Student Loan Data System (NSLDS), which is the central database for all federal student loan information.
Here are the details on loan rehabilitation:
How loan rehabilitation works
You and your loan holder (guaranty agency) enter into a rehabilitation agreement that defines monthly payment amounts and due dates for your nine monthly payments during the 10-month period. The rehabilitation agreement you sign with your loan holder will set reasonable and affordable monthly payments based on your financial status.
Once you consent to your rehabilitation agreement, you are obligated to make your nine monthly payments on time (within 20 days of the due date). You cannot make extra payments to speed up the process. If you fail to fulfill the terms of your rehabilitation agreement, your loans will remain in default.
The rehabilitation is final once a lender purchases the loan, which may not be immediately after the qualifying payments are made. When the loans are transferred to an eligible lender, your guaranty agency will request the consumer reporting agencies to delete its negative remarks from your credit history, and your loan information will be updated on the National Student Loan Data System (NSLDS). Once the defaulted loan is removed from your NSLDS account profile, you may regain eligibility for deferments, forbearances and Title IV financial aid.
You may experience a delay in your loan account being updated on NSLDS. If so, contact your loan holder for help. If ECMC holds your loans, contact us.
You only get one chance to rehabilitate your loans. If you default again in the future, you will not be able to rehabilitate your loans again.Back to top
What loan rehabilitation does
Loan rehabilitation is a powerful tool for dealing with default. Completing rehabilitation restores your loans to good standing. Just entering loan rehabilitation has immediate effects on your defaulted loans.
Entering into a loan rehabilitation agreement:
- Limits collection activity to those required by law and to communications that support the rehabilitation
- Limits the initiation of the administrative wage garnishment process
- May protect your state and federal tax refunds or other federal payments from offsets by the U.S. Department of the Treasury
Successfully completing a loan rehabilitation program restores your loans to their pre-default status:
- Your loans return to good standing
- You are eligible for deferment, forbearance and alternative repayment options
- You may be eligible to receive additional student loans and Title IV Federal financial aid
- Your loans reset to their original terms, interest rate and repayment period, minus your 9-month rehabilitation period
- Your credit report shows positive progress in repaying your loans, which may repair some of the damage done by default
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Loans that qualify for rehabilitation
- Federal Stafford loans (formerly GSL)
- Federal Perkins loans (formerly NDSL)
- Federal PLUS (Parent Loans for Undergraduate Students)
- Federal Grad PLUS (PLUS loans for graduate and professional students)
- Federal Consolidation loans
- Federal SLS (formerly ALAS)
- Health Professions Student Loans (HPSL)
- Nursing Student Loan (NSL)
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Important rehabilitation rules
Rehabilitation has important limitations and rules:
- Rehabilitation is a one-time-only opportunity. If you default again, the program will not be available to you.
- Only defaulted loans can be rehabilitated.
- Only certain loans qualify for rehabilitation, see above.
- No legal judgment can exist against you for your student loans. If you have a default judgment, contact your loan holder to learn how to pursue rehabilitation.
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Whom to contact about loan rehabilitation
To rehabilitate your defaulted loans, contact your loan holder. If ECMC holds your loans, contact us at 800-367-1589. Our hours of operation are Monday-Thursday, 7 a.m.-9 p.m., and Friday, 7 a.m.–7 p.m. Central time. To expedite a discussion of rehabilitation payment options, you should have your most recent federal tax return available when you call.
If you don’t know who your loan holder is, go to the National Student Loan Data System (NSLDS), which is the central database for all federal student loan information.Back to top