Federal Student Loan Rehabilitation
New York Debt Relief Law Firm
A rehabilitation program generally entails a payment schedule wherein the
borrower makes 9 consecutive monthly payments over a period of 10 months.
The payments are determined by the collection agency and are based on
the borrowers income, as reflected on their recent tax return and/or pay
stubs. If the income-based rehabilitation payment is unaffordable to the
borrower, then a reduced payment plan can be requested based on documented
expenses (rent, car payment, food, transportation, utilility bills, etc...).
By processing these expenses, the resulting rehabilitation payment should be
reasonable and affordable.
Our lawyers help people find solutions to their delinquent and defaulted
student loans. If you are overwhelmed with numerous accounts at various
agencies, our office can conduct "due diligence" to identify
the status of your accounts as well as the available resolution options,
which may include student loan rehabilitation,
disability discharge, or even
student loan settlement. Student loans can be complex and confusing. Allow our experienced professionals
to help guide you through the process and ease the anxiety that often
accompanies juggling large amounts of debt.
Our Lawyers Help Resolve Student Loan Debt
OR CALL: (888) 301-0584
About Student Loan Rehabilitation
Government-backed student loans have several different resolution options
available for accounts. The options available are usually dependant on
the type of loan and it's status. For example, rehabilitation programs
are not available on private student loans. It is also oftentimes unavailable
on government or state-backed loans that are in judgment status. In our
law firm, we see that many client's seek to rehabilitate their
Direct Loans and
FFELP loans guaranteed by the Department of Education, as well as state-issued
loans from entities such as
New York State Higher Education. In order to address a Perkins Loan, a borrower would need to contact
the educational institution directly, not the loan servicer or lender.
Only loans that are in default status may be eligible for a rehabilitation
program. Even if your federal taxes are being offset and/or your wages
are being garnished, a rehabilitation program can still help you get your
loan out of default. If a garnishment has already started, the borrower
may have to make voluntary rehabilitation payments in addition to the
garnished amounts. Garnighments are not considered "voluntary payments",
and as such, do not apply to the rehabilitation. Oftentimes, a request
to stop the garnishment can be made after making 5 consecutive monthly
rehabilitation payments at an amount agreed upon with the collector.
Benefits of Student Loan Rehabilitation
There are many great features of loan rehabilitation. When the program
is succesfully completed in accordance with the rehabilitation agreement,
a borrower can enjoy some or all of these benefits:
The loan status will be removed from "default" and updated on
- The borrower can be decertified for offset of their income tax refund
Admin Wage Garnishment will stop
- The borower can become eligible for new student loans
- Collection fees will stop to accrue
Although there are many benefits to rehabilitation, it is also important
to keep in mind that "late payments" on the rehabilitated loan
will not be removed from the credit report. Also, the collection fees
that accrued during default can be added on to the principal on the new
loan, causing a higher total repayment. However, our law office has encountered
many instances where the collectors rehabilitation agreement includes
a provision where the collection fees are capped (at 16% or 18.5%). This
can sometimes effectively reduce a borrowers liability if their collector
has been charging a higher rate, such as 20% - 25%. As of July 2014, upon
the sale of the loan, the collection fees are limited to a maximum of 16%.
Completing a Rehabilitation Program
Upon completing the rehabilitation program, the account(s) are removed
from default status; the default information is removed from the credit
report with experian, equifax, and transunion; the borrower is recertified
to receive federal student aid; and is de-certified for federal tax refund
offset. Any collection fees that have accrued may be added on to the principal
balance in the new loan. The account can regain elegibility for certain
benefits if they were available on the loan prior to default, such as
deferments, forebearances, payment plans, and loan forgiveness options.
Once the program is completed, it can take up to 90-days for the loan to
be sold to a new lender, and at that time, the borrower must elect a
student loan payment plan and proceed to make regular monthly payments to their new loan servicer.
In the interim, the borrower should continue making the regular rehabilitation
payment until instructed otherwise. If the borrower completes the rehabilitation
program, and subsequently defaults, there is a possibility that they will
not have a new opportunity to rehabilitate that particular student loan.
Student Loan Lawyers in New York City
At the law office of Simon Goldenberg, our attorneys are experienced in
navigating the complexities of debt resolution, including private and
federal student loans. Our legal staff helps residents of New York understand
the solutions available to them and we advocate to get the best resolution
under the borrowers unique circumstances.
Need help with your Student Loans? Are you in New York?
OR CALL: (888) 301-0584
We offer is free phone evaluation to help identify how our
student loan debt relief lawyers may be of assistance in a particular matter. If you are in
New York City and are experiencing issues with your student loans, speak to our law
firm to learn what options may be available to you. Our lawyers are here to help.