Consolidating your student loans
Once you have made the required nine payments, your loans will no longer be in default.
To rehabilitate a defaulted Federal Perkins Loan, you must make a full monthly payment each month, within 20 days of the due date, for nine consecutive months.
Your required monthly payment amount is determined by your loan holder.
Find out where to go for information about your Perkins Loan.
There are special considerations if you want to reconsolidate an existing Direct Consolidation Loan or Federal (FFEL) Consolidation Loan that is in default: In addition, if you want to consolidate a defaulted loan that is being collected through garnishment of your wages, or that is being collected in accordance with a court order after a judgment was obtained against you, you cannot consolidate the loan unless the wage garnishment order has been lifted or the judgment has been vacated.
If you choose to repay the new Direct Consolidation Loan under an income-driven plan, you must select one of the available income-driven repayment plans at the time you apply for the consolidation loan and provide documentation of your income.
To rehabilitate your loan, you must choose one of the two payment amounts.
You’ll regain eligibility for benefits that were available on the loan before you defaulted, such as deferment, forbearance, a choice of repayment plans, and loan forgiveness, and you’ll be eligible to receive federal student aid.Late payments will remain on your credit report for seven years from when they were first reported.It’s important that you fully understand loan rehabilitation and loan consolidation before making your decision.You’ll need to provide documentation of your monthly income and expenses, including a completed form.
Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered.
These involuntary payments may continue even after you begin making payments under a loan rehabilitation agreement, but they can’t be counted toward the required nine voluntary loan rehabilitation payments.