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How Will Student Loan Reform Help Me Get My Defaulted Loans Back in Shape? – Jennifer

“Dear Steve,

I defaulted on a student loan and need to get back on my feet. It has CRUSHED my credit (currently at 520) so i do need to improve.

How does the new student loan reform affect those that already defaulted? Can those with a defaulted loan get some relief and improve their credit rating?


Dear Jennifer,

Well I’ve got some good news and bad news.

The bad news is if these are private student loans your options are limited.

The good news is if these are government backed loans you do have some options and you can rebuild your credit.

Call the servicer and talk to them about your available options to bring the loan current. After twelve consecutive payments the servicer should have the negative history removed. It’s the only form of legal credit manipulation I’m aware of.

The importance of getting your loan back into good graces is so you can be eligible for the Income Based Repayment (IBR) Program and then the final reduction programs to be announced in 2012.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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