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Loan rehabilitation can take longer than consolidation, but it takes the defaulted loan off a borrower's credit report and does not add accrued interest to the balance.3
To rehabilitate a loan and get back into good standing, a borrower must agree to and make nine voluntary, reasonable, and affordable monthly payments over ten consecutive months, as determined by their loan servicer.
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Loan rehabilitation can take longer than consolidation, but it takes the defaulted loan off a borrower's credit report and does not add accrued interest to the balance.3
To rehabilitate a loan and get back into good standing, a borrower must agree to and make nine voluntary, reasonable, and affordable monthly payments over ten consecutive months, as determined by their loan servicer.
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The Department of Education will restart collections of defaulted student loans on May 5, and experts say defaulted borrowers should take action now to get back into good standing.
The 5 million borrowers who are in default could have their wages garnished if they can't get back into good standing, according to the Department of Education.
Department of Education. "U.S. Department of Education to Begin Federal Student Loan Collections, Other Actions to Help Borrowers Get Back into Repayment."
This means money would be withheld from borrowers' paychecks, tax refunds and Social Security benefits to pay what they owe.
Experts say there are two main ways for borrowers with defaulted loans to get into good standing and avoid wage garnishments.
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