Student Loan Rehabilitation Program

Student loan rehabilitation is a repayment program offered to borrowers who are now, or have been, in a delinquent loan repayment status. This includes borrowers who have submitted one or more past due payments, or whose loan account has entered a default status. To successfully rehabilitate your student loan will not only bring the loan account current, but will also repair your credit!

Student loan payment affects your personal credit rating just as credit card, mortgage, and/or car payments do: payments received late are reported as such to the three major credit bureaus. Because accurately reported information is not negotiable, the late payment information reported may remain a permanent part of your credit history for up to ten years. Student loan rehabilitation is a way to earn the right to renegotiate your delinquent/defaulted student loan status.

How does it work?

• The specifics are negotiated between the borrower and the lender, but the following terms are standard:
  • The borrower must make (12) consecutive, on time, monthly payments.
  • After the 6th successful payment has been received and processed, the borrower regains financial aid eligibility.
  • After the 12th successful payment has been received and processed, the lender will:
    
    a) Instruct the credit bureaus to remove all negative payment information previously reported;
    
    b) Have the borrower sign a new promissory note, allowing for an additional (9) years to repay the loan;
    
    c) Stop all collection activity;
    
    d) Allow access to all previously denied deferment, forbearance, and cancellation provisions.
    
    Important: If you are a teacher, or plan to become a teacher, you may be able to cancel part or all of your loan debt, per year of teaching service (minimum guidelines apply). Please review the cancellation provisions before making a decision to consolidate your loan. You may lose all potential cancellation benefits if you consolidate. However, if you rehabilitate, all previously suspended cancellation benefits will be reinstated.
    
    
• Cal Poly Borrowers with judgments: When loans become severely delinquent, Cal Poly may seek a judgment against the defaulted borrower in a court of law. If this occurs, the judgment becomes part of the affected borrower's personal credit report. A borrower in this situation may enter into a payment agreement with Cal Poly that includes the following terms:
  
  • The borrower will be expected to pay the loan balance - including all applicable fees and interest - in full by making 12 consecutive, on-time monthly payments (cannot pay less than, or more than 12 payments);
  • All payments must be received/processed by the billing service, ECSI, no earlier than 10 days before the established due date, and no later than 10 days after the established due date.
  • After the successful processing of the 12th on-time payment , Cal Poly will -
    
    a) instruct any credit bureau to which the default was reported to remove the default from the borrower's credit history; and
    
    b) vacate the judgment.

  To get more information please contact your Federal Perkins and/or Federal Stafford loan lender(s) directly.
  
  Manage your credit report
  
  Rebuilding your credit
  
  Loan consolidation
  

Student Accounts
California Polytechnic State University, San Luis Obispo
(805) 756-1428 studentaccounts@calpoly.edu