Loan Rehabilitation

Successful Federal Student Loan Rehabilitation Will Remove Your Loan(s) from Default

Find out if you qualify to participate in the loan rehabilitation program.

Overview

Some of the benefits of successfully completing the student loan rehabilitation program include:

• Bringing your federal student loan(s) out of a default status
• Requesting the deletion of ECMC's tradeline from your credit history
• Reinstating your eligibility for income-driven repayment options
• Making your federal student loan(s) eligible for applicable forbearance and deferment benefits
• Restoring your eligibility for future Title IV federal financial aid, including federal grants

Since the completion of the rehabilitation program and its benefits are only available one time, it is important that you are prepared to commit to making nine qualifying payments within the 10-month period. After the loan(s) has been removed from default and transferred to an eligible lender, your new lender or servicer will work with you to establish a new payment arrangement.

To inquire about rehabilitating your defaulted federal student loan(s), contact ECMC at 855-810-4922. Our hours of operation are Monday-Thursday, 7 a.m.-5 p.m., and Friday, 7 a.m.–4 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. You may also complete the rehabilitation application process online through the following link:

Apply for rehabilitation

Click here to watch a short video about Loan Rehabilitation.

• What Entering Loan Rehabilitation Does

  Loan rehabilitationRehabilitationA program offering borrowers an opportunity to bring their loans out of a default status and request the removal of the default from the national consumer reporting agencies. Payment amounts are based on a borrower's individual circumstances. Borrowers must make nine, full, voluntary, on-time payments over a 10-month period. can be a helpful tool for dealing with defaulted federal student loansDefaultStudent loan default is a state of delinquency on student loans occurring when a borrower has not made a payment or payment arrangements on the student loan debt. Federal Family Education Loan Program (FFELP) student loans are considered to be in default after 270 consecutive days of missed payments; default under the Direct Loan Program is 330 consecutive days of missed payments. (Please note: As of July 1, 2010, new federal student loans are originated only through the Direct Loan Program.). Just entering loan rehabilitation has immediate effects on your defaulted loan(s).

  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 garnishmentAdministrative wage garnishment - AWGThe situation where holders of defaulted federal student loans can, without your consent, initiate a process that requires employers to withhold up to 15% of the wages from your paycheck. The withholdings are applied to the balance owed until your student loans are paid, removed from default or satisfactory payment arrangements are established. process
  • May protect your state and federal tax refunds or other federal payments from offsets by the U.S. Department of the Treasury
  • Restores your eligibility for future Title IV federal financial aid, including federal grants

• How Loan Rehabilitation Works

  You and your loan holder(s)Loan holderThe institution that holds the title to a loan and therefore has a right to collect on that loan. The holder of Federal Family Education Loan Program (FFELP) loans may be a lender, a guaranty agency, or the federal government. The holder of Perkins loans may be a school or the federal government. The holder of Federal Direct Loan Program loans is the federal government. enter into a rehabilitationRehabilitationA program offering borrowers an opportunity to bring their loans out of a default status and request the removal of the default from the national consumer reporting agencies. Payment amounts are based on a borrower's individual circumstances. Borrowers must make nine, full, voluntary, on-time payments over a 10-month period. 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(s) will provide the monthly payment amount based on your financial status.

  Once you consent to your rehabilitation agreement, you are obligated to make nine, on-time monthly payments within 10 months. You cannot make extra payments to speed up the process. If you fail to fulfill the terms of your rehabilitation agreement, your loan(s) will remain in default.

  The rehabilitation is complete once a lender purchases the loan(s), which may not be immediately after the qualifying payments are made. Within 45 days of the loan(s) being transferred to an eligible lender, ECMC will request the national consumer reporting agencies (aka credit bureaus)Credit bureau - consumer reporting agencyA credit bureau is a national consumer reporting agency. It is any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses and means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. 15 U.S.C. § 1681a(f). to delete its tradeline from your consumer reportConsumer reportA consumer report is any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (a) Credit or insurance to be used primarily for persona, family, or household purposes; (b) Employment purposes; or (c) Any other purpose authorized under section 1681b of the Fair Credit Reporting Act. 15 U.S.C. § 1681a(d)., and your loan information will be updated on the Federal Student Aid (FSA). Once the defaulted loan(s) is removed from your FSA account profile, you may regain eligibility for deferments, forbearances and Title IV federal financial aid.

  If you experience a delay in your loan account being updated on FSA, contact your loan holder(s) for help. If ECMC holds your loan(s), contact us at 855-810-4920.

  If you default again after successfully rehabilitating your loan(s), you will not be able to rehabilitate this loan(s) again.

• Which Loans Quality for Rehabilitation

  Only federal student loansFederal loansStudent loans issued under Title IV of the Higher Education Act of 1965. As of July 1, 2010 all federal loans are issued by the U.S. Department of Education through the Federal Direct Loan Program. Borrowers must complete the Free Application for Federal Student Aid (FAFSA) to be considered for these loans, which may offer more protections and lower interest rates than private loans. are eligible for rehabilitation. These include:

  • 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 Loans (NSL)

• What Are Some of the Important Rehabilitation Limitations and Rules

  Rehabilitation has important limitations and rules:

  • Rehabilitation is a one-time-only opportunity. If you defaultDefaultStudent loan default is a state of delinquency on student loans occurring when a borrower has not made a payment or payment arrangements on the student loan debt. Federal Family Education Loan Program (FFELP) student loans are considered to be in default after 270 consecutive days of missed payments; default under the Direct Loan Program is 330 consecutive days of missed payments. (Please note: As of July 1, 2010, new federal student loans are originated only through the Direct Loan Program.) after a successful rehabilitation, the program will not be available for this loan(s).
  • Only a defaulted loan can be rehabilitated.
  • Only certain loans qualify for rehabilitation, see above.

• Whom to Contact about Loan Rehabilitation

  To rehabilitate your defaultedDefaultStudent loan default is a state of delinquency on student loans occurring when a borrower has not made a payment or payment arrangements on the student loan debt. Federal Family Education Loan Program (FFELP) student loans are considered to be in default after 270 consecutive days of missed payments; default under the Direct Loan Program is 330 consecutive days of missed payments. (Please note: As of July 1, 2010, new federal student loans are originated only through the Direct Loan Program.) loan(s), contact ECMC at 855-810-4922. Our hours of operation are Monday-Thursday, 7 a.m.-5 p.m., and Friday, 7 a.m.–4 p.m., Central time. To expedite a discussion of rehabilitation payment options, have your most recent federal tax return available when you call. You may also complete the rehabilitation application process online through the following link:

  Apply for rehabilitation