As anyone who has ever defaulted on a student loan knows the past only resulted in you being sentenced to academic limbo. In addition, you’re forced to suffer the following additional consequences:
- You can no longer get additional federal student aid.
- Your wages can be garnished.
- Your default will be reported to credit bureaus.
- Your tax refund can be withheld.
- You can be taken to court.
What Are My Options If I Default?
Fortunately there are two student loan repayment options that are currently giving millions of forsaken former undergraduates a second chance at financial redemption.
One of the institutions spearheading this second chance movement is Hocking College in Nelsonville, Ohio. Currently, Hocking’s Office of Financial Aid Services is working to help local defaulters address their student debt issues through two mediums: loan rehabilitation and loan consolidation.
What is Loan Rehabilitation?
Loan rehabilitation involves students signing a written agreement to make nine voluntary, reasonable, and affordable payments over a period of no more than ten consecutive months. Under the terms of this agreement, the amount of the payment is determined by the loan holder and will provide the student with some of the following benefits:
- They will be able to regain their student status.
- Students will once again become eligible for federal student aid.
- Students will have the default status removed from their loan.
- Students wages won’t be garnished.
- Students can have the default status removed from their credit history.
How Does Loan Consolidation Work?
The second option, loan consolidation, allows students to pay off one or more federal student loans by taking out a new Direct Consolidation Loan. However, in order for this to occur, the student must pick one of the following payment-based options:
- Option 1: Students must agree to repay the new Direct Consolidation Loan courtesy of an income-driven repayment plan.
- Option 2: Students can choose to make three consecutive, voluntary, full monthly on-time payments on their defaulted loan. Once this has been accomplished, then their loan consolidation process can begin.
Regardless of which option students choose they first need to contact the holder of their loan to discuss which payment option will best accommodate their situation.
How Can Hocking College’s Office of Financial Aid Services Help?
Although the Office of Financial Aid Services has no authority to intervene in the negotiations between students who have defaulted and their loan holders, they can perform other functions. They can be instrumental in helping open up the lines of communication between the defaulter and the loan holder, and to make the students more fully aware of their options.
For more information on pursing student loan rehabilitation or loan consolidation, contact Hocking College’s Office of Financial Aid Services.