Consolidating federal loans
While loan rehabilitation takes several months to complete, you can quickly apply for loan consolidation.
However, loan rehabilitation provides certain benefits that are not available through loan consolidation.
However, your credit history will still show late payments that were reported by your loan holder before the loan went into default.
Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size.
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.
If you make three voluntary, on-time, full monthly payments before consolidating, you can choose from any of the repayment plans available to Direct Consolidation Loan borrowers.
One option for getting your loan out of default is loan rehabilitation.