Defaulted on your federal loans? Here's how the new rehabilitation rules change

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An ever-increasing number of student loan borrowers struggle to keep up with their payments; roughly 9 million federal loan borrowers were in default as of March 2026.

Under the current rules, borrowers in default can rehabilitate their loans — returning their debt into good standing — just once. But thanks to the One Big Beautiful Bill Act (OBBBA), borrowers will be able to take advantage of federal student loan rehabilitation up to two times starting on July 1, 2027.

Defaulting on federal loans can have steep consequences, including damaged credit, garnished wages, and even the loss of your tax refund. Student loan rehabilitation is a program that allows borrowers who have defaulted on their federal loans to recover and bring their loans current.

To get out of default, there are two core options: loan rehabilitation and loan consolidation. With loan rehabilitation, you agree to make nine voluntary, reasonable, and affordable monthly payments within 20 days of the due date.

The payment amount is determined by you

Fuente original: Yahoo Finance (https://finance.yahoo.com/personal-finance/student-loans/article/student-loan-default-new-rehabilitation-rules-224758457.html)