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The
chart below provides information comparing the federal loan
consolidation program with the federal loan rehabilitation
program. Both programs may be beneficial to a borrower,
depending on the borrower's needs. Note:
borrowers who have never been delinquent on a student loan
payment will not benefit from the loan rehabilitation program.
At the conclusion of your review you will be given the option
to obtain more specific program information. Please direct
all questions to your lender(s). |
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LOAN CONSOLIDATION |
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LOAN REHABILITATION |
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| General
definition: |
A
consolidation loan is a loan obtained to pay off existing student
loans. In most cases the consolidation loan will offer
a lower monthly payment amount, due to the extension of the
10-year repayment period to up to 30 years, depending on indebtedness. |
|
Student
loan rehabilitation is a repayment program offered to borrowers
who are now, or have been, in a delinquent loan repayment status,
or who have defaulted on their student loan payments.
Program terms vary per loan type and lender. |
| Interest
rate: |
The
consolidation loan offers a fixed interest rate, which is calculated,
in part, by using the weighted average of the loans included
in the consolidation.
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|
Vary
per loan type. Review the promissory note terms with the
lender. |
| Loan
eligibility: |
Federal
student loans only. Contact your lender for details.
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|
Terms
vary per lender and loan type. Contact your lender for details. |
| Judgment
loans: |
Cannot
be consolidated. |
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Can
be rehabilitated at your lender's discretion.
Contact your lender for details.
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| Defaulted
loans: |
Can
be consolidated. Contact the Department of Education's
William D. Ford
Direct Consolidation program.
|
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Can
be rehabilitated. Contact your lender for
details. |
| Personal
credit rating: |
Consolidating
will not remove late payment information
previously reported, but the loan will show as paid in full.
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Upon
successful rehabilitation, the credit bureaus will be instructed
to remove all late payment information previously reported. |
| Collection
activity: |
Collection
activity should stop when the consolidation loan has been funded.
Borrowers should continue to make their scheduled payments until
that time.
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Collection
activity should stop upon successfully rehabilitating the loan.
It is at the lender's discretion to discontinue collection activity
before the loan is rehabilitated. |
| Financial
aid eligibility: |
Restored
when the consolidation loan has been funded (where applicable).
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Restored
after the 6th successful rehabilitation payment has been received
and processed. |
| Transcript
access: |
Where
applicable, hold removed when consolidation loan has been funded. |
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where
applicable, hold removed upon successfully rehabilitating the
loan (receipt and processing of final rehabilitation payment).
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| Loan
terms: |
Borrower
subject to the repayment terms of the consolidation loan only. |
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Upon
successful rehabilitation, the borrower is given up to an additional
(9) years of repayment. Original promissory note terms
remain active.
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| Deferment
& forbearance options: |
As
outlined by the consolidation loan promissory note.
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As
outlined by the original promissory note. |
Teacher,
military,
public service
loan cancellation provisions: |
Consolidation
borrowers may be forfeiting any cancellation provisions associated
with the loans included in the consolidation. Check with
the original lender(s).
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Borrowers
in default may regain cancellation benefits upon successfully
rehabilitating the loan. |
Links: |
Consolidation information
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Rehabilitation information
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