ECFR 211 Rehab and Defaulted Loans 

1. Qualifying Loan Types 

1. Direct Loan 

2. Direct Subsidized Loan 

3. Direct Unsubsidized Loan  

4. Direct Consolidation Loan, or  

5. Student Direct PLUS Loan 

2. Qualifying Origination Dates 

1. All Origination Dates 

3. Terms of Rehabilitation 

1. 10 Months  

2. 9 voluntary qualifying payments reasonable and affordable monthly payments within 20 days of the due date, during 10 consecutive months 

4. Requirements 

1. A minimum payment of $5 per month will be required from the borrower 

2. The borrower’s AGI and family size are required to determine the amount of the required rehab monthly payments. 

3. If a borrower’s wages are being garnished due to their student loans being in default a borrower can have their garnishment lifted after making 5 qualifying payments. 

4. A borrower must accept the terms of the agreement that is provided by the secretary within 15 days of receiving the terms in writing by signing the agreement.  

5. A Direct Loan that is rehabilitated on or after August 14, 2008, cannot be rehabilitated again. 

5. Collection of a defaulted loan  

1. The Secretary may take any action authorized by law to collect a defaulted Direct Loan including, but not limited to,  

2. filing a lawsuit against the borrower 

3. reporting the default to nationwide consumer reporting agencies 

4. Requesting the Internal Revenue Service to offset the borrower’s Federal income tax refund and  

5. garnishing the borrower’s wages.