Student Loan Rehabilitation Form OMB 1845-1020
When you request rehabilitation of your student loans the servicer will send you Rehabilitation form OMB 1845-1020. The servicer the loan servicer will make every attempt to make these payments as large as possible. Although your loan may not be required to include spousal income the servicer will often demand it. If your present income has declined they may demand you use the prior year’s income.
This is because servicers are paid up to 40% of the late fees and penalties they can assess. If they are sued their defense is that they represent the Department of Education DOE. They clearly say they don’t represent you. If your account is in default they may have a responsibility to comply with the Fair Debt Collection Practices Act. The FDCPA primarily only requires them to tell the truth and not be abusive.
They can still steer you into programs which do not help you. They will sell students on the very programs which will cost the student the maximum amount. There is a difference between PAYE and REPAYE. One requires you to include spouse income the other does not. It helps to know they are primarily concerned with their own profits.
The Benefits of student loan rehabilitation
The benefit of rehabilitation is that you may have been in default for 20 years but your student loan can be within 10 months placed into a current status sometimes with a history as if it had been paid on time for the prior 20 years. Overnight you may become qualified for better interest rates on an auto or for an essential expense such as a home loan. It may be you have not made payments for 20 years but on completion of the 10 on time payments your student loan will become up to date.
Often rehabilitation is also necessary in order to consolidate student loans.
How to properly process Student Loan Rehabilitation Form OMB 1845-1020
Take a long look at the OMB 1845-1020 form. If you have income that is documented such as social security or a W2 and income taxes then you must include this income. Notice only reasonable and necessary expenses are deducted from this income to arrive at disposable income. If a dependent child has large medical expenses then you may deduct those expenses. Some children require special private schooling due to a medical condition. Those school costs are allowed as reasonable and necessary expenses. Daycare is also deductible.
If your income is poverty level or below you will have the minimum rehabilitation payment of $5.00 per month. You will have to make 9 of 10 on-time payments. After the loan has been rehabilitated your payment however may be zero for income-based loans.
There is a program Studentloanify which will analyze and give you the best solution to your student loan problem. The professional version will process your application electronically and give you the cheapest rates. Attorneys often used the professional version of this program if they deal with consolidations and rehabilitations regularly. You can either process the rehabilitation form yourself, or use an attorney who knows how to use the Studentloanify program. The rehabilitation for uses family income. However, there are some student loan programs that only use the borrower’s income. DOE essentially discourages marriages by increasing your rehabilitations payments if you are married.
