| What is the Rehabilitation payment program? | | | | rating that relates to a borrower's defaulted student |
| Rehabilitation payment program is the process by | | | | loan, as if it never went into default. |
| which a federal agency or a third-party given | | | | Benefits to completing the program may include: |
| authority by a Federal agency, assess the | | | | * Your loan(s) will no longer be considered to be in a |
| borrower’s financial situation to allow a payment | | | | default status. |
| arrangement. Through this process at the Dept. of | | | | * The default status reported by the loan holder to |
| Ed and the agency’s discretion, the debtors will | | | | the national credit bureaus will be deleted. |
| be allowed to repay their student loans through | | | | * The borrower may become eligible for the same |
| installment arrangements (payments). Only after the | | | | benefits that were available on the loans before the |
| necessary documents have been obtained by Dept. | | | | loans defaulted. This may include deferment, |
| of ED and the 3rd party agency the borrowers can | | | | forbearance, and Title IV eligibility (to restore your |
| complete the number of consistent payments | | | | eligibility to receive additional Title IV federal financial |
| required in order to successfully rehabilitate. | | | | aid). **See section below** |
| What is the purpose of the Rehabilitation payment | | | | * Wage garnishment ends and the Internal Revenue |
| program? | | | | Service no longer withholds your income tax refund. |
| Student loan rehabilitation is a repayment program | | | | Title IV federal financial aid (Additional student aid): |
| offered to borrowers with student loans in a default | | | | A borrower may restore your eligibility to receive |
| status. The purpose of the Rehabilitation payment | | | | additional Title IV federal financial aid (Student |
| program is to offer a solution for those who can not | | | | assistance). The payment amount must be |
| pay the entire balance of the loan (or a lump sum | | | | approved in advance by the department of |
| pay-off). The program is designed to get the loan | | | | education. By making the qualifying payments on |
| back into good-standings with the Department of | | | | the rehabilitation payment program the payments will |
| Education and to restore the status of the loan back | | | | be considered as an approved amount. By making |
| to the status it was in, prior to defaulting. Before a | | | | six agreed-upon monthly payments over a six month |
| payment option is offered the holder of the | | | | period a borrower's eligibility to receive additional |
| defaulted student loan(s) must provide a reason for | | | | federal financial aid will be restored. |
| not being able to satisfy the entire balance of the | | | | Other ways to receive additional federal financial aid: |
| loan. Upon contact, if they determine that the | | | | * Repay or satisfy the loan in full. |
| borrower is in fact experiencing financial hardship, a | | | | * Consolidate your loan through the FFEL loan |
| borrower is allowed to make the payment | | | | consolidation program or the William D. Ford Direct |
| arrangement. A borrower agreeing to the payments | | | | Loan Program. |
| must complete a number of required monthly | | | | * Rehabilitate your loan by completing the entire |
| payments to show the consistency of their | | | | rehabilitation payment program. |
| payments. By fulfilling the requirements of the | | | | Since defaulted student loans have no statute of |
| arrangement a borrower may benefit from the | | | | limitations for enforceability, a borrower would remain |
| program. By starting this program and by making | | | | ineligible for additional federal financial aid until they |
| the initial payment the individual will no longer qualify | | | | complete one of the options mentioned above. |
| for the Federal wage garnishment. | | | | Additional questions: |
| Upon a successful completion of the rehabilitation | | | | Do I lose my ability to settle on my loan(s) while on |
| payment program a borrower’s student loan will | | | | the Rehabilitation Program? |
| not only be brought to a current status, but will also | | | | What if I can't afford the payment amount? |
| repair their credit. This program provides an | | | | Am I really required to use a checking account? |
| opportunity to completely remove the negative | | | | How can I calculate the lowest payment? |
| rating that relates to a borrower’s defaulted | | | | What do I need do to get additional student aid? |
| student loan, as if it never went into default. | | | | OTHER TOPICS |
| Benefits to completing the program may include: | | | | What is a Treasury Offset? |
| * Your loan(s) will no longer be considered to be in a | | | | Under this Treasury Offset Program, the Financial |
| default status. | | | | Management Service, a bureau of the US |
| * The default status reported by the loan holder to | | | | Department of Treasury will offset Federal and/or |
| the national credit bureaus will be deleted. | | | | State payments if a borrower fails to pay their |
| * The borrower may become eligible for the same | | | | obligation. While the most common type of Federal |
| benefits that were available on the loans before the | | | | payment offset is Federal income tax refunds, |
| loans defaulted. This may include deferment, | | | | several other types, including social security benefit |
| forbearance, and Title IV eligibility (to restore your | | | | payments, are also eligible for full or partial offset. In |
| eligibility to receive additional Title IV federal financial | | | | other words, if a borrower has an outstanding debt |
| aid). **See section below** | | | | and they have incoming social security benefits, this |
| * Wage garnishment ends and the Internal Revenue | | | | too can be subjected to the offset. |
| Service no longer withholds your income tax refund. | | | | In addition to defaulted debts held by ED, defaulted |
| What is the Rehabilitation payment program? | | | | loans held by guaranty agencies are also included in |
| Rehabilitation payment program is the process by | | | | the process. |
| which a federal agency or a third-party given | | | | Other Federal and State agencies also certify debts |
| authority by a Federal agency, assess the borrower's | | | | for offset, but Department of Ed has historically |
| financial situation to allow a payment arrangement. | | | | been responsible for the largest volume of offsets. |
| Through this process at the Dept. of Ed and the | | | | As a result, many tax professionals, and even the |
| agency's discretion, the debtors will be allowed to | | | | IRS, will automatically assume that an offset has |
| repay their student loans through installment | | | | been requested by the Department of Ed when, in |
| arrangements (payments). Only after the necessary | | | | fact, it may have gone to some other Federal or |
| documents have been obtained by Dept. of ED and | | | | State debt. |
| the 3rd party agency the borrowers can complete | | | | |
| the number of consistent payments required in order | | | | What is Administrative Wage Garnishment (AWG)? |
| to successfully rehabilitate. | | | | Administrative wage garnishment (A.W.G) is the |
| What is the purpose of the Rehabilitation payment | | | | process by which a Federal agency (Dept. of |
| program? | | | | Education) or a third-party given authority by a |
| Student loan rehabilitation is a repayment program | | | | Federal agency (the collection agencies) may, without |
| offered to borrowers with student loans in a default | | | | first obtaining a court order, order an employer to |
| status. The purpose of the Rehabilitation payment | | | | withhold amounts from the debtor's wages to satisfy |
| program is to offer a solution for those who can not | | | | a delinquent debt. Dept. of Education considers |
| pay the entire balance of the loan (or a lump sum | | | | AWG to be a tool of last resort. Before using AWG, |
| pay-off). The program is designed to get the loan | | | | Dept of Education expect its representatives to have |
| back into good-standings with the Department of | | | | attempted to resolve the debt through voluntary |
| Education and to restore the status of the loan back | | | | means: attempting to secure the balance in full, an |
| to the status it was in, prior to defaulting. Before a | | | | approved settlement, or installment payments that |
| payment option is offered the holder of the | | | | are "reasonable and affordable" based on the |
| defaulted student loan(s) must provide a reason for | | | | debtor's individual financial circumstances. Some within |
| not being able to satisfy the entire balance of the | | | | the industry may consider this the guaranteed |
| loan. Upon contact, if they determine that the | | | | recovery method. |
| borrower is in fact experiencing financial hardship, a | | | | Representatives must consider whether the debtor |
| borrower is allowed to make the payment | | | | presents a legitimate defense to the repayment of |
| arrangement. A borrower agreeing to the payments | | | | the debt(s), and whether AWG may be ineffective |
| must complete a number of required monthly | | | | because the debtor is self-employed or a Federal |
| payments to show the consistency of their | | | | employee, in which cases the collection agency will |
| payments. By fulfilling the requirements of the | | | | recommend litigation or a salary offset. |
| arrangement a borrower may benefit from the | | | | What is a compromise (Settlement agreement)? |
| program. By starting this program and by making | | | | Compromises are account settlements whereby |
| the initial payment the individual will no longer qualify | | | | Department of Ed (through the collection agencies) |
| for the Federal wage garnishment. | | | | accepts a reduced overall payment to satisfy the |
| Upon a successful completion of the rehabilitation | | | | debt(s) in full. The Department of Education can |
| payment program a borrower's student loan will not | | | | compromise FFEL or Perkins Loans of any amount, |
| only be brought to a current status, but will also | | | | and suspend or terminate collection of these loans. It |
| repair their credit. This program provides an | | | | can be difficult, however to negotiate a "good" |
| opportunity to completely remove the negative | | | | deal. |