The Student Loan Rehabilitation Payment They Want is Too High


Dear Steve,

We have had our pay garnished on student loans for over a year. They say the only way to get out of this is to pay the additional 500.00 a month on both garnishments. We have been turned down for loan consolidation by the us dept of education.



Dear Brenda,

Well that’s interesting. Nearly 85% of people on a rehabilitation program have additional payments of $5. The actual formula used to determine the rehabilitation payment is:

“Beginning June 1, 2015, a rehabilitation payment amount based on the income and expense form be set at 15 percent of “discretionary income,” defined as the difference between the borrower’s household income and household expenses (after some reported expenses were subjected to reasonability limits). The manner in which a borrower’s income or expenses are determined and the standards for determining the reasonability of those expenses will not change.”

If you are married and file your taxes jointly, then you need to know the following information:

“For borrowers who provide a copy of their Federal tax return as documentation of income, Federal Student Aid uses the AGI from that return; if the borrower and spouse filed jointly, then the spouse’s income would be included in the calculation. For borrowers who provide alternative documentation of income, Federal Student Aid currently includes the spouse’s income in the calculation only if the borrower and spouse are living together; in the future, to increase consistency with the IBR plan (on which the rehabilitation calculation is based) we plan to only include spousal income for borrowers who provide alternative documentation when a borrower indicates that they filed jointly.”

When calculating your reasonable expenses the servicer should count the garnishment as an expense which offsets income.

These answers come from this guide.

Until your loan is rehabilitated it will be considered in default. Once out of wage garnishment and default you will be able to consolidate your loans.

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If you were just in default but not yet garnished you could consolidate out of default.


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