Consolidating a defaulted student loan
(In either case, check with your lender.) More Interest Paid With a longer repayment period, you'll pay more interest over the life of the loan.Manage Monthly Budget Savings from reduced monthly payments allows you to pay other monthly bills with higher interest rates, such as credit cards.When you rehabilitate your loans, you work with your loan servicers on a monthly payment plan to get your loan current.Rehabiliation requires the borrower to make nine payments in a ten month period to bring the loan out of default.
If you just want to reduce your monthly payment, discuss the federal loan repayment options available with your lender. Single Payment If you have loans with multiple lenders/holders, you send a monthly payment to each.However, both options are far better than letting your federal loans stay in default. Rehabilitation and consolidation both accomplish the same goal…getting your federal student loan or loans out of default.Consolidating your loans means that your old loans will be paid off and that you will be left with a new larger consolidated loan.Loan rehabilitation takes nearly a year and it is necessary for the borrower to work with each lender to bring of their loans out of default.