Two women are on track to rehabilitate student loan debts that are in default*.
Arlington residents learned about a new** loan rehabilitation program for federal loans during an Extension class in March. Extension offered the class, Student Loan Debt Repayment, to affordable housing residents through our partnership with the Arlington Partnership for Affordable Housing (APAH***).
After attending an Extension class, two woman contacted the Department of Education about rehabilitation plans to exit default. One woman’s payment plan was set at $5 per month. Both woman have made consistent payments each month since March. They are on track to exit default after their October 2015 payment.
“It’s really a relief to be able to get this burden taken care of so I’m really excited about it,” said one of the women.
*Default happens when no payments are made for 270 days. The consequences (https://studentaid.ed.gov/sa/repay-loans/default#consequences) of default aren’t pretty. The entire unpaid balance of the loan and interest is immediately due. Debt collectors take over the loan and starting calling. Debts will increase because of late fees, additional interest, court costs, collection fees, attorney’s fees and any other costs associated with the collection process.
**The Department of Education introduced new rules (http://www.washingtonpost.com/business/2014/07/22/e23ee706-11db-11e4-8936-26932bcfd6ed_story.html) in 2014 that enable a borrower to get out of default by making nine consecutive on-time and in-full monthly payments. Borrowers are offered repayments rates based on their income, family size and state of residence.
***APAH serves individuals and families earning between $20,000 and $60,000 per year.