 TITLE: What Is Student Loan Rehabilitation? CONTENT: How Does Student Loan Rehabilitation Work?\n------------------------------------------\nOnce you enter into a student loan rehabilitation agreement, your student loan servicer will assign you a monthly payment tied to your discretionary income. You must make nine payments within a 10-month period on time—which the government defines as within 20 days of the due date—and at the end of your agreement, the loan will no longer be in default.\nThat means your credit report will no longer reflect that the loan went into default, though the late payments leading up to it will remain for seven years. Additionally:\n*   If the government was previously collecting your unpaid debt by garnishing your wages or withholding your tax refunds, those actions will end.\n*   You'll regain the ability to get more federal student aid and take advantage of repayment benefits.\n*   You'll no longer receive communications from collection agencies, which the government enlists help from to recover unpaid debt.\nYou can only rehabilitate a defaulted loan one time, so it's crucial to develop a plan to avoid a future default. Work with your student loan servicer to choose an ongoing repayment plan that you can afford. Consider one of the four income-driven repayment plans, which, similar to your rehabilitation agreement, calculate your monthly payment as a portion of your discretionary income. You'll make payments for 20 or 25 years, depending on the plan.\nIf you choose an income-driven plan, at the end of your repayment period, your unpaid balance will be forgiven. You'll likely have to pay income tax on that amount. Consider using the government's repayment estimator tool to evaluate which plan is best for you and how much of your balance may be left at the end of the repayment period. END