Consolidating your student loans

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

*NOTE: We previously indicated that loan consolidation would result in removal of the record of default from a borrower’s credit history.

Once you have made the required nine payments, your loans will no longer be in default.

To rehabilitate a defaulted Federal Perkins Loan, you must make a full monthly payment each month, within 20 days of the due date, for nine consecutive months.

If you failed to make your payments on your federal student loan and now are in default, don’t let the consequences of default affect your financial future. Loan Rehabilitation Loan Consolidation Repayment in Full Getting Help With Your Defaulted Loan One way to get out of default is to repay the defaulted loan in full, but that's not a practical option for most borrowers.

The two main ways to get out of default are loan rehabilitation and loan consolidation.

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

Another option for getting out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan.To rehabilitate your loan, you must choose one of the two payment amounts.Your loan holder may be collecting payments on your defaulted loan through wage garnishment or Treasury offset (taking all or part of your tax refunds or other government payments).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.Involuntary payments may continue to be taken until your loan is no longer in default or until you have made some of your rehabilitation payments.

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