Loan rehabilitation is a method to remove your FFEL Program student loan from default status.
After making at least 9 satisfactory payments within 20 days of your payment due date, your guaranty agency can re-sell your loan to a secondary market or loan holder, thereby removing the loan from a default status.
Many guaranty agencies rehabilitate loans in cycles several times a year, so do not stop making satisfactory payments until you are notified that your loan has been rehabilitated. Your guaranty agency may require you to authorize rehabilitation in writing by a certain deadline.
If the MDHE holds your defaulted loan and you are interested in loan rehabilitation, contact us at (800) 473-6757. The following documents will need to be completed and signed:
- Rehabilitation agreement letter
- Financial Disclosure for Reasonable and Affordable Rehabilitation Payments
- Proof of income in the form of two consecutive pay stubs
- Most recent year’s tax returns
- Statements of any student loans held by other holders
Successful rehabilitation of your defaulted MDHE student loan will result in the following benefits:
- The MDHE will remove the default status on your MDHE-guaranteed loan
- The MDHE will delete the negative information reported by us to national credit bureaus
- Your eligibility for deferments and forbearances will be renewed
- Your eligibility for new financial aid will be reinstated
- Collection costs will be reduced to 18.5% at the time your loan is rehabilitated