Loan Rehabilitation

Loan rehabilitation is a method to remove your student loan from default status.

After making at least 9 satisfactory payments within 20 days of your payment due date, your guaranty agency can re-sell your loan to a secondary market or loan holder, thereby removing the loan from a default status.

Many guaranty agencies rehabilitate loans in cycles several times a year, so do not stop making satisfactory payments until you are notified that your loan has been rehabilitated. Your guaranty agency may require you to authorize rehabilitation in writing by a certain deadline.

If the MDHE holds your defaulted loan and you are interested in loan rehabilitation, contact us at (800) 473-6757. The following documents will need to be completed and signed:

• Rehabilitation agreement letter
• Financial statement or financial disclosure questionnaire
• Proof of income in the form of two consecutive pay stubs
• Most recent year’s tax returns
• Statements of any student loans held by other holders

Successful rehabilitation of your defaulted MDHE student loan will result in the following benefits:

• The MDHE will remove the default status on your MDHE-guaranteed loan
• The MDHE will delete the negative information reported by us to national credit bureaus
• Your eligibility for deferment or forbearance will be renewed
• Your eligibility for new financial aid will be reinstated
• Collection costs will be reduced to 18.5% at the time your loan is rehabilitated