Loan Rehabilitation vs. Consolidation: Which Fresh Start Is Right for You?
If your student loans have slipped into default, the weight of the situation can feel crushing. Between the calls from collection agencies and the potential for wage garnishment, it is easy to feel like you are stuck in a financial dead end. However, the U.S. Department of Education offers two primary "Fresh Start" programs designed specifically to help you pull your loans out of default and regain your financial footing: Loan Rehabilitation and Loan Consolidation . While both programs achieve the goal of returning your loans to good standing, they operate in very different ways. Choosing the right one depends on your timeline, your credit goals, and your long-term repayment strategy. This guide explores the nuances of each option to help you decide which path leads to your best financial future. Path 1: Student Loan Rehabilitation Loan rehabilitation is often viewed as the most comprehensive way to recover from a default, primarily because of its unique benefits for your cr...