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Lenders consolidating federal student loans

Take a look at the chart below to compare the benefits of loan rehabilitation versus the benefits of loan consolidation.

Another option for getting out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan.

Loan consolidation allows you to pay off one or more federal student loans with a new consolidation loan.

You’ll need to provide documentation of your monthly income and expenses.

Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered.

That cell of the table has now been corrected to indicate that loan consolidation will not result in removal of the record of default from the borrower’s credit history.

If you rehabilitate a defaulted loan, the record of the default will be removed from your credit history.

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.