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Loan Rehabilitation

Loan rehabilitation is the process in which a borrower may bring a student loan out of default by adhering to specified repayment requirements. This process is different and separate from Title IV Reinstatement.

The following is a brief explanation of loan rehabilitation. The process is explained in more detail in the Common Manual.

To rehabilitate a defaulted loan, the borrower must make 9 voluntary, full payments during a period of 10 consecutive months. The payments must be made within 20 days of the due date. However, a borrower may start over if unable to fully meet these requirements within a consecutive ten-month period. A lump sum prepayment of future installments cannot be used to satisfy the consecutive months payment requirement.

"Voluntary payments" are those made directly by the borrower. Borrowers with loans in an involuntary payment status such as judgment, garnishment, administrative wage garnishment, income or asset execution, federal or state tax offset must contact ISAC to determine if they qualify for loan rehabilitation.

For purposes of loan rehabilitation, "full payments" mean "reasonable and affordable" payments agreed to by the borrower and ISAC. The required monthly payment amount may be no more than is reasonable and affordable based upon the borrower's total financial circumstances.

Approximately 60 days after the borrower has made the required payments and the signed Rehabilitation Agreement has been received, ISAC will place the borrower with a lender that will purchase the loan(s). At that time, the borrower is considered to have rehabilitated the loan and is again eligible for all benefits of the program, including any remaining deferment eligibility.

Borrowers should contact an ISAC Call Center Representative at isac.studentservices@isac.illinois.gov or 800.899.4722 with any questions.