Loan Rehabilitation: Reasonable and Affordable Payments

LOAN REHABILITATION: INCOME AND EXPENSE
INFORMATION

OMB No. 1845-0120
DRAFT FORM
Exp. Date XX/XX/XXXX

William D. Ford Federal Direct Loan (Direct Loan) Program / Federal Family
Education Loan (FFEL) Program
WARNING: Any person who knowingly makes a false statement or misrepresentation on this form or on
RIE
any accompanying document is subject to penalties that may include fines, imprisonment, or both, under
the U.S. Criminal Code and 20 U.S.C. 1097.
SECTION 1: BORROWER INFORMATION
Please enter or correct the following information.
Check this box if any of your information has changed.
SSN
Name
Address
State

City

Zip Code

Telephone - Primary
Telephone - Alternate
Email (Optional)
SECTION 2: HOUSEHOLD INCOME AND REASONABLE AND NECESSARY MONTHLY EXPENSES
You received this form because you asked to rehabilitate your defaulted loans, but objected to the payment amount your
loan holder calculated using the 15% formula (see Section 6). After receiving this form, your loan holder will offer an
alternative payment amount. The alternative amount may be less or more than the amount calculated using the 15%
formula. To begin rehabilitating your defaulted loans, you must choose between the two amounts. To rehabilitate, you must
make 9 on-time payments of that amount over a period of 10 consecutive months.
Provide the monthly income and expense information listed below. Include documentation of these sources of income or
expenses if your loan holder asks you to. Include your spouse's income only if your spouse contributes to your household
income. Your loan holder has the authority to determine if the claimed amount of any expense is reasonable and necessary.
Before entering your monthly income and expenses, carefully read the entire form, including Sections 5, 6, and 7.
MONTHLY INCOME
MONTHLY EXPENSES
10. Food
1. Your employment income
2. Spouse's employment income
3. Child support received

11. Housing
12. Utilities

4. Social Security benefits
5. Worker's compensation

13. Basic communication
14. Necessary medical/dental

6. Public assistance

15. Necessary insurance
16. Transportation

List types
7. Other income
Describe
8. Total monthly income (sum
of items 1 through 7)
9. If your total monthly
income is $0, explain
your means of
support

Number of vehicles
17. Child/dependent care
18. Required child/spousal support
19. Federal student loan payments
20. Private student loan payments
21. Other expenses
Describe
22. Total monthly expenses (sum
of items 10 through 21)
Page 1 of 5

Continue to Sections 3 and 4 on page 2.

Borrower Name

Borrower SSN

SECTION 3: FAMILY SIZE AND SPOUSE IDENTIFICATION
Your family size includes you, your spouse, and your children (including unborn children who will be born before the end of
the current calendar year), if the children will receive more than half of their support from you. Your family size includes other
people only if they live with you now, receive more than half of their support from you now, and will continue to receive this
support from you for the year for which you are certifying your family size. Support includes money, gifts, loans, housing,
food, clothes, car, medical and dental care, and payment of college costs.
23. Family size
24. Are you requesting rehabilitation of a Direct Consolidation Loan or a Federal Consolidation Loan that was made jointly to
you and your spouse?
Yes. Enter your spouse's name and SSN:
Spouse's Name
No. Continue to Section 4.

Spouse's SSN

SECTION 4: UNDERSTANDINGS, CERTIFICATIONS, AND AUTHORIZATION
I understand that:
1. I have received this form because I requested the opportunity to rehabilitate my defaulted loans and objected to the
reasonable and affordable monthly payment amount calculated using the 15% formula.
2. My loan holder will calculate an alternative reasonable and affordable monthly payment amount that will be based
solely on the information I provide on this form and, if requested, supporting documentation.
3. If I do not accept either the 15% formula payment amount or the payment amount determined by my loan holder
based on information from this form, the loan rehabilitation process will not proceed and I will be required to repay my
defaulted loans in accordance with the terms of the loan and applicable law.
4. If I do not provide any supporting documentation requested by my loan holder by the deadline specified by my loan
holder, my request for loan rehabilitation will not be considered.
5. If I want to rehabilitate a defaulted Direct Consolidation Loan or Federal Consolidation Loan that was made jointly to
me and my spouse and am requesting an alternative payment amount, my spouse and I must each sign below.
6. If I rehabilitate a loan and default on the same loan again in the future, I may not rehabilitate that loan a second time.
7. I must notify my loan holder immediately if my address changes.
8. If my loan is rehabilitated, my loan will be sold or transferred to a new loan holder or loan servicer. After the sale or
transfer, I will be asked to select a repayment plan. If I do not select a repayment plan, my loans will be placed on the
standard repayment plan, which will likely require me to make a much higher monthly payment amount than the
payment I made to rehabilitate my loan.
9. After my loan is rehabilitated, I may be eligible to repay my loans under an income-driven repayment plan that bases
my payment on my income and family size. An income-driven repayment plan is the type of repayment plan most
likely to have a monthly payment similar to the payment I made to rehabilitate my loans.
10. I can learn more about the eligibility requirements and application process for income-driven repayment plans by
visiting StudentAid.gov/IDR or by asking my loan holder.
I certify that (1) the information that I have provided on this form is true and correct and (2) upon request, I will provide
additional documentation to my loan holder to support the information I have provided in this form.
I authorize the loan holder to which I submit this request (and its agents or contractors) to contact me regarding my request
or my loans, including the repayment of my loans, at any number that I provide on this form or any future number that I
provide for my cellular telephone or other wireless device using automated dialing equipment or artificial or prerecorded
voice or text messages.
Borrower's Signature

Date

Spouse's Signature

Date

Your spouse must sign this form only if you entered your spouse's name and SSN in Section 3.
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SECTION 5: INSTRUCTIONS
If you are not completing this form electronically, type or
print using dark ink. Enter dates as month-day-year (mm-ddyyyy). Use only numbers. Example: March 14, 2017 =
03-14-2017. Include your name and the account numbers for
your defaulted loans on any documentation that you are
required to submit with this form. If you need help
completing this form, contact your loan holder.
Return the completed form to the address shown in
Section 8
MONTHLY INCOME IN SECTION 2 (ITEMS 1-9)
Your loan holder may request supporting documentation
for any income items.
Employment income documentation may include a pay
stub or a letter from the employer stating the income paid to
you by that employer.
Child support, Social Security benefits, worker’s
compensation, or public assistance documentation may
include copies of benefits checks or a benefits statement, a
letter from a court, a governmental body, or the individual
paying child support, specifying the amount of the benefit.
Public assistance: Identify the type of public assistance
received (see definition of “public assistance” in Section 6).
Other income: Include any other income not covered in
items 1-6 and identify the source of the income.
If you report that your Total Monthly Income is zero,
explain your means of support in Item 9.

Basic communication: Include the amount spent on
basic communication expenses, such as basic telephone,
internet, and cable TV.
Medical and dental: Include the amount spent on
necessary medical and dental expenses and procedures not
covered by insurance, such as medically necessary
prescription and nonprescription medications, and
medically necessary nutritional supplements. Do not include
any costs relating to medical or dental insurance premium
payments.
Insurance: Include the amount spent on insurance, such
as necessary renter’s, auto, medical, dental, or life insurance.
Include any amounts paid toward insurance premiums.
However, if the income amount you listed under Monthly
Income already reflects deductions from your pay for
insurance premiums, do not list the amount of these
deductions as an Insurance expense. Include homeowner’s
insurance under Item 11 (Housing).
Transportation: Include the amount spent on basic
transportation expenses such as fuel, car payments, basic
vehicle maintenance, public transportation, tolls, and
parking. Also list the number of vehicles for which you are
claiming related transportation expenses.
Child/dependent care: Include the amount spent on
care for children or other dependents in the household and
other work-related child/dependent care expenses.
Legally required child /spousal support: Include the
amount spent on legally required child support and spousal
support.

MONTHLY EXPENSES IN SECTION 2 (ITEMS 10-22)
For each monthly expense, provide the amount you
usually spend each month. Your loan holder may request
supporting documentation for any of these items. Do not
include a single expense in more than one category. If you
have no expenses under a category, enter 0 for that
category.
Food: Include the amount spent on food, even if
purchased using the Supplemental Nutrition Assistance
Program (SNAP) (food stamps).
Housing: Include the amount spent on housing and
shelter, such as rent, required security deposits, mortgage
payments (including principal, interest, taxes, and
homeowner’s insurance), maintenance, and repairs.
Utilities: Include the amount spent on housing-related
utility bills, such as gas, electric, fuel oil, water, sewer, trash,
and recycling.

Federal student loan payments: Include the total
monthly amount you pay on any federal student loans
except for the defaulted loans you are trying to rehabilitate,
unless you are subject to mandatory withholding such as
wage garnishment or Treasury offset (e.g., your Social
Security is being garnished). If you are subject to wage
garnishment or Treasury offset include the amount that is
collected from you each month.
Private student loan payments: Include the total
monthly amount you pay on any private student loans.
Include any type of payment, voluntary or otherwise.
Other expenses: Include the amount spent on any other
necessary expenses not covered in items 10 - 20 and explain
these expenses. These other expenses will be considered
only if the Department of Education determines that they
should be considered. If more space is needed to list other
expenses, attach a separate piece of paper and include your
name and Social Security Number at the top.

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SECTION 6: DEFINITIONS
The William D. Ford Federal Direct Loan (Direct Loan)
Program includes Federal Direct Stafford/Ford (Direct
Subsidized) Loans, Federal Direct Unsubsidized Stafford/
Ford (Direct Unsubsidized) Loans, Federal Direct PLUS
(Direct PLUS) Loans, and Federal Direct Consolidation (Direct
Consolidation) Loans.
The Federal Family Education Loan (FFEL) Program
includes Federal Stafford Loans (both subsidized and
unsubsidized), Federal PLUS Loans, Federal Consolidation
Loans, and Federal Supplemental Loans for Students (SLS).
Rehabilitation of your defaulted loan occurs only after
you have made 9 voluntary, reasonable and affordable
monthly payments within 20 days of the due date during 10
consecutive months and, for FFEL loans held by a guaranty
agency, when the loan has been sold to an eligible lender or
assigned to the U.S. Department of Education (the
Department). When you rehabilitate your loans, you will
regain all the benefits of the Direct Loan Program or FFEL
Program, including eligibility for deferments or forbearances
and for a repayment plan with a monthly payment amount
based on your income. You will also regain eligibility to
receive additional federal student aid, including additional
federal student loans. After a defaulted loan is rehabilitated,
your loan holder will instruct any consumer reporting
agency (credit bureau) to which the default was reported to
remove the default from your credit history.

Reasonable and affordable payment amount means a
monthly payment determined by the loan holder based
either on the 15% formula or on information provided in this
form and supporting documentation. It cannot be a
percentage of your total loan balance or based on
information unrelated to your total financial circumstances.
The 15% formula means 15% of the amount by which
your Adjusted Gross Income exceeds 150% of the poverty
guideline amount that is applicable to your family size and
state, divided by 12. Your minimum payment may not be
less than $5.00.
The loan holder of a defaulted Direct Loan Program
loan is the Department. The loan holder of a defaulted FFEL
Program loan may be a guaranty agency or the Department.
Public assistance means payments you receive under a
federal or state program. These assistance programs include,
but are not limited to, Temporary Assistance for Needy
Families (TANF), Supplemental Security Income (SSI), Food
Stamps/Supplemental Nutritional Assistance Program
(SNAP), or state general public assistance.

SECTION 7: LOAN REHABILITATION AGREEMENT
To rehabilitate your loan, you must accept either the
monthly rehabilitation payment amount determined using
the 15% formula, or the payment amount determined based
on the monthly income, monthly expenses, and family size
information that you provide on this form and on any
requested supporting documentation.
Your loan holder will provide you with a written loan
rehabilitation agreement confirming your monthly
rehabilitation payment amount.

To accept the loan rehabilitation agreement, you must
sign the agreement and return it to your loan holder.
During the loan rehabilitation period, the loan holder
will limit contact with you on the loan being rehabilitated to
collection activities that are required by law or regulation,
and to communication that supports the rehabilitation.
If you do not accept either monthly payment amount,
your rehabilitation request will not be considered any
further.

SECTION 8: WHERE TO SEND THE COMPLETED FORM
Return the completed form and any documentation to:
(If no address is shown, return to your loan holder.)

If you need help completing this form, call:
(If no telephone number is shown, call your loan holder.)

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SECTION 9: IMPORTANT NOTICES
Privacy Act Notice. The Privacy Act of 1974 (5 U.S.C.
552a) requires that the following notice be provided to you:
The authorities for collecting the requested
information from and about you are §421 et seq. and §451
et seq. of the Higher Education Act of 1965, as amended (20
U.S.C. 1071 et seq. and 20 U.S.C. 1087a et seq.) and the
authorities for collecting and using your Social Security
Number (SSN) are §§428B(f) and 484(a)(4) of the HEA (20
U.S.C. 1078-2(f) and 1091(a)(4)) and 31 U.S.C. 7701(b).
Participating in the William D. Ford Federal Direct Loan
(Direct Loan) Program or the Federal Family Education Loan
(FFEL) Program and giving us your SSN are voluntary, but
you must provide the requested information, including your
SSN, to participate.
The principal purposes for collecting the
information on this form, including your SSN, are to verify
your identity, to determine your eligibility to receive a loan
or a benefit on a loan (such as a deferment, forbearance,
discharge, or forgiveness) under the Direct Loan and/or
FFEL Programs, to permit the servicing of your loans, and, if
it becomes necessary, to locate you and to collect and
report on your loans if your loans become delinquent or
default. We also use your SSN as an account identifier and to
permit you to access your account information
electronically.
The information in your file may be disclosed, on a
case-by-case basis or under a computer matching program,
to third parties as authorized under routine uses in the
appropriate systems of records notices. The routine uses of
this information include, but are not limited to, its disclosure
to federal, state, or local agencies, to private parties such as
relatives, present and former employers, business and
personal associates, to consumer reporting agencies, to
financial and educational institutions, and to guaranty
agencies in order to verify your identity, to determine your
eligibility to receive a loan or a benefit on a loan, to permit
the servicing or collection of your loans, to enforce the
terms of the loans, to investigate possible fraud and to verify
compliance with federal student financial aid program
regulations, or to locate you if you become delinquent in
your loan payments or if you default. To provide default rate
calculations, disclosures may be made to guaranty agencies,
to financial and educational institutions, or to state
agencies. To provide financial aid history information,
disclosures may be made to educational institutions.

To assist program administrators with tracking
refunds and cancellations, disclosures may be made to
guaranty agencies, to financial and educational institutions,
or to federal or state agencies. To provide a standardized
method for educational institutions to efficiently submit
student enrollment statuses, disclosures may be made to
guaranty agencies or to financial and educational
institutions. To counsel you in repayment efforts, disclosures
may be made to guaranty agencies, to financial and
educational institutions, or to federal, state, or local
agencies.
In the event of litigation, we may send records to the
Department of Justice, a court, adjudicative body, counsel,
party, or witness if the disclosure is relevant and necessary
to the litigation. If this information, either alone or with
other information, indicates a potential violation of law, we
may send it to the appropriate authority for action. We may
send information to members of Congress if you ask them
to help you with federal student aid questions. In
circumstances involving employment complaints,
grievances, or disciplinary actions, we may disclose relevant
records to adjudicate or investigate the issues. If provided
for by a collective bargaining agreement, we may disclose
records to a labor organization recognized under 5 U.S.C.
Chapter 71. Disclosures may be made to our contractors for
the purpose of performing any programmatic function that
requires disclosure of records. Before making any such
disclosure, we will require the contractor to maintain Privacy
Act safeguards. Disclosures may also be made to qualified
researchers under Privacy Act safeguards.
Paperwork Reduction Notice. According to the
Paperwork Reduction Act of 1995, no persons are required
to respond to a collection of information unless such
collection displays a valid OMB control number. The valid
OMB control number for this information collection is
1845-0120. Public reporting burden for this collection of
information is estimated to average 60 minutes per
response, including time for reviewing instructions,
searching existing data sources, gathering and maintaining
the data needed, and completing and reviewing the
collection of information. The obligation to respond to this
collection is required to obtain a benefit in accordance with
34 CFR 682.405 or 685.211. If you have questions regarding
the status of your individual submission of this form, contact
your loan holder (see Section 8).

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