How to Bounce Back from a Defaulted Student Loan

The last thing any student want to do is default on their student loan. Defaulting on a student loan obligation can be very embarrassing and not only are they devastating to the borrowers credit history, but they will also ruins their chances of obtaining further assistance to pay for additional educational studies. Although a defaulted loan is very damaging to an individual, it is not the end of the world. There are programs available to help students successfully bounce back from a defaulted student loan. People face financial hardships on a daily basis and because of these defaults, there are programs that help students in danger of loan defaults. Most students are unaware of these programs and fail to ask their loan representatives for help resolving their individual issues.

Types of Programs Available

Bouncing back after a loan default will take some time and effort.  The first thing you need to do is stop avoiding your loan representative. Take the initiative and contact them to explain your situation.  Although the loan is in default your loan representative is trained to help you come to a solution that all can agree upon. Ask about one of the following programs to see if you qualify for help under any.

  •  The Loan Rehabilitation Program- This programs is set up to help student get out of default from agreeing to make 9 monthly payments, within a 10 month period to their current lender. After successfully making the required payments, the lender will contact the credit bureau to remove the default status from the borrowers credit rating. However any delinquencies reported before the borrowers default will remain on their credit file.
  • Loan Consolidation Program- This is by far one of the best programs available because students who have defaulted on their loans can consolidate and get a fresh start. If you qualify your loan will no longer be in default, the negative status will be deleted from your credit report. You will get a fresh start on repayment and will become eligible again to receive federal grants and other government aid. Also, wage garnishments are discontinued.
  • Loan Cancellation and Discharge- A borrower may be eligible for a cancellation of their loan for many different reasons. Students qualify for a cancellation if they can provide proof of their permanent disability. Federal student loans may also be canceled if the school you were attending closed while you were in school, or within 3 months of your withdrawal. Students who obtained their loans as a result of a false certification by school stating that the student would receive a benefit from the school's training are also eligible for cancellation of that loan.

Bouncing Back

Failing to act is the only thing that will prevent you from straightening out your bad loan situation. Contact your loan representative to see what can be done to resolve your delinquent loan status. Your credit score can bounce back only once you begin to make timely payments so get started as soon as you can.

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