Hi Heather, Thanks for everything you do! I’m in PSLF and love it! My husband graduated from law school a few years ago and could not find work until recently. He mistakenly thought all his federal loans were in deferment, however, he just found out that some loans from his last year of law school was sold to a private lender and has been in default since 2009. Yikes!

My husband has found work with the government and would like to consolidate his loans and enter IBR and PSLF. He was told (by the lender) that he needs to rehabilitate his defaulted loan by making reasonable payments for 9 months before the loan can be consolidated and placed under IBR/ PSLF. He can immediately consolidate all his loans now, but the defaulted loan will remain on his credit report for 7 years. Our web research appears to back this up.

Since he is allowed to reconsolidate for PSLF, should he consolidate his non-defaulted loans now under ICR or IBR and then re-consolidate under IBR/PSLF once the defaulted loan is rehabbed?

Thanks so much for any advice you may have for us.

Rehabilitation is one possibility, but you guys should also be considering consolidation as a way out of default.  The National Consumer Law Center makes terrific resources available and has all the distinctions between the two set out here: http://www.studentloanborrowerassistance.org/blogs/wp-content/www.studentloanborrowerassistance.org/uploads/File/information-sheet.pdf

Thanks, Heather! That was a very helpful chart!

We thought we should go with the rehabilitation option because it takes the “default” off his credit report and then he can consolidate anyway under PSLF after 9 months. He will lose the 9 months of payments that would “count” toward PSLF, but gain a better credit report. His payments on his rehabbed loan are very low and he can use ICR/IBR on his regular loans until his 2nd consolidation. It’s difficult to tell how much taking the “default’ off his credit report will help in the long run, or how much having the “default” will hurt us in the long run.

Thanks again for everything you do. I’m a career advisor now and I tell students about your website all day long!