TG
myTG

SHARE

Handling Default

 

Handling Default


Repaying Your Defaulted Student Loan

Rehabilitation

Rehabilitation is a program to remove your student loan(s) from a default status. To rehabilitate your defaulted student loan(s), you must make nine voluntary, on-time, full monthly payments during a period of 10 consecutive months. After you have successfully completed TG's rehabilitation program, TG will delete its reporting of the default to all national consumer reporting agencies. In addition, TG will request that the lender that filed the default claim on your student loan(s) also remove the default status from your credit report.

Generally, upon completion of the rehabilitation program, you will have nine years and three months to repay the remaining balance of your loan(s) or up to 29 years and three months to repay the remaining balance of your consolidation loan(s). This is because the nine monthly payments you made to rehabilitate your loan(s) are considered the first nine months of the rehabilitated loan's repayment period. If you need to make lower monthly payments, certain other income driven repayment options may also be available to you. Check with your lender to determine if you qualify.

TG attempts to establish and maintain agreements with lenders to purchase rehabilitated loans; however, there may be periods of time during which no lenders are participating in TG's rehabilitation program or during which no lender is willing to purchase your loan(s) on terms that TG considers commercially reasonable. Accordingly, the sale of your loan(s) by TG to another lender is dependent on there being, at the time your loan(s) becomes eligible to be resold by TG to a participating rehabilitation lender, one or more lender(s) who is/are participating in TG's rehabilitation program and who is/are willing to purchase your loan(s) on terms that TG considers commercially reasonable.

  • Eligibility requirements
    Loans for which a judgment has been obtained, or for which you have been convicted of, or have pled nolo contendere (no contest) or guilty to, a crime involving fraud in obtaining federal student aid funds are not eligible for rehabilitation. To qualify:
    • You must establish a satisfactory repayment arrangement and make nine on-time, voluntary, full monthly payments. Payments obtained by state offsets or federal Treasury offsets, wage garnishment, trustee payments, or income or asset execution will not satisfy this requirement.
    • TG will determine your monthly payment amount based on either a required federal methodology or your unique financial circumstances. You must provide TG with certain financial information necessary to calculate your payment amount.
    • You cannot pay ahead or remit double payments in order to accelerate the rehabilitation process.
    • The account balance at the time of the rehabilitation must be at least $1,000.
  • Rehabilitation process
    • Once your loan(s) are set up for rehabilitation, TG will mail its Rehabilitation Agreement to you.
    • You must fill out the Rehabilitation Agreement completely and return it to TG. Incomplete agreements will not be accepted.
    • You must provide TG with documentation verifying the financial information you provided to determine your payment amount.
    • You must complete and return the signed Rehabilitation Agreement in order to participate in TG's rehabilitation program. Once the payment criteria above have been met, a participating lender will purchase the original loan(s), and you will continue to make monthly payments to the new lender.
    • TG's current rehabilitation lenders are:
      • ACS Education Services (East West Bank)
        P.O. Box 371834
        Pittsburgh, PA 15250-7834
        Phone: (800) 835-4611
      • ACS Education Services (Homebanc N.A.)
        P.O. Box 371834
        Pittsburgh, PA 15250-7834
        Phone: (800) 835-4611
      • AES (College Savings)
        Harrisburg, PA 17130-0001
        Phone: (800) 233-0557
      • AES (Sun Trust Bank)
        American Education Services
        Harrisburg, PA 17130-0001
        Phone: (800) 233-0557
      • Georgia Student Finance Authority (Edsouth)
        P.O. Box 116221
        Atlanta, GA 30368-6221
        Phone: (888) 414-2692
      • Iowa Student Loan (First Convenience Bank (FCB) — Killeen)
        P.O. Box 659701
        West Des Moines, IA 50265-0970
        Phone: (800) 243-7552
      • Nelnet (SACU)
        P.O. Box 2970
        Omaha, NE 68103-2970
        Phone: (888) 486-4722
    • Previously used rehabilitation lenders/servicers are:
  • Rehabilitation benefits
    • After you have successfully completed TG's rehabilitation program, TG will delete its reporting of the default to all national consumer reporting agencies. In addition, TG will request that the lender that filed the default claim on your student loan(s) also remove the default status from your credit report.
    • You will regain eligibility for any remaining deferments and forbearances for which you may be eligible (additional criteria may apply).
    • You will regain eligibility for additional federal student aid, provided that you have no other student loans in default and meet all other eligibility criteria.
    • You will be given the same maximum repayment period you received when you initially took out the loan, minus nine months (i.e., the nine monthly payments you made under your Rehabilitation Agreement)*. Contact your new lender to inform them if you wish to repay your loan(s) under the Income-Based Repayment plan.
    • Your loan(s) will retain the original terms and interest rate.

* If you are currently in Administrative Wage Garnishment, you may be eligible to rehabilitate your account.

For more information on TG's rehabilitation program, call TG at (800) 222-6297 or send TG an email message.

Back to Top

Reinstatement

If you default on a student loan(s) that was guaranteed by TG, TG becomes the holder of your loan. One of the consequences of default is the loss of eligibility for additional federal student aid. Your eligibility for federal student aid may be reinstated if you request to make satisfactory repayment arrangements with TG. Under these arrangements, you must make six consecutive, voluntary, on-time, full monthly payments to TG before you will be eligible for additional federal student aid. After you meet these qualifications, TG will send appropriate notification to your school, upon request, that you have fulfilled your obligations under these arrangements.

Once your federal student aid eligibility has been reinstated, you must remain current on your loan payments throughout the repayment period. If you do not remain current in making your monthly payments, you will become ineligible for additional federal student aid until your defaulted loan(s) is paid in full.

For more information on how to set up repayment arrangements and/or to request reinstatement of your federal student aid eligibility, call TG at (800) 222-6297 or send TG an email message.

Back to Top

Consolidation

One way to resolve a defaulted loan(s) is to combine your existing federal student loan(s) into a new Direct Consolidation Loan from the Department of Education (ED). Even if you have a single, defaulted Federal Family Education Loan Program (FFELP) loan, you may obtain a Direct Consolidation Loan to resolve the default.

In the process of consolidation, the original loan(s) is paid in full and a new Direct Consolidation loan is originated for the combined balance of the consolidated loans. ED determines the interest rate of the Direct Consolidation loan by taking the weighted average of the interest rates on your existing loans and rounding up to the nearest 1/8th of a percent (0.125%).

  • Eligibility Criteria
    Your defaulted federal loan(s) may be consolidated, provided that it is not a previous spousal consolidated loan and you are not subject to a judgment secured through litigation or an order of administrative wage garnishment on a federal student loan for which you are requesting consolidation.

    In order to qualify for a Direct Consolidation Loan, you must:
    • Certify (at the time of application) that you do not have another Direct Consolidation Loan application pending.
    • Agree to repay the Consolidation loan under an income-contingent or Income-Based Repayment plan.
    • Repay in full any ineligible amount borrowed prior to the consolidation, if due to your error.
  • Eligible Loans
    • Federal Family Education Loan Program (FFELP) loans (Stafford, PLUS, SLS, and Consolidation loans)
    • Federal Perkins Loans
    • Health Professions Student Loans (HPSL)
    • Health Education Assistance Loans (HEAL)
    • Nursing Student Loans (NSL)
    • Federal Direct Loan Program (FDLP) loans (Stafford, PLUS, SLS, and Consolidation loans)
    • Federal Insured Student Loans (FISL)
  • Consolidation Benefits
    • You may combine multiple student loan payments to multiple loan holders into one payment to one loan holder, the Department of Education.
    • You may be eligible for deferments and forbearances, if needed.
    • Some loans may qualify for interest subsidy during authorized periods of deferment.
    • You may select either an income-contingent, or Income-Based Repayment plans.
    • You may be eligible for the Public Service Loan Forgiveness Program (other eligibility criteria apply).
    • If you are a servicemember, you may receive a reduced interest rate or no accrual of interest during periods of qualifying active duty military service (other eligibility criteria apply).

Please contact us to see if you qualify for loan consolidation. For more information, call TG at (800) 222-6297 or send TG an email message.

Back to Top

Repayment Terms for Defaulted Loan Borrowers

The following repayment terms may be available:

  • Payment in full. By paying the balance of a defaulted loan in full, you will save paying additional interest and collection costs. You may avoid other consequences of default including federal Treasury Offset and administrative wage garnishment. By paying in full, your credit report will be updated to show a paid-in-full status.
  • Standard repayment. For balances up to $7,500, the standard repayment plan schedules payments over a 10-year term. Try TG's repayment calculator to determine possible monthly payment amounts.
  • Longer repayment terms. Available on balances that exceed $7,500, you may be able to schedule payments over a term longer than 10 years. See the repayment chart below for more details.
    Total BalanceMaximum Repayment Term
    $7,500 to $9,99912 years
    $10,000 to $19,99915 years
    $20,000 to $39,99920 years
    $40,000 to $59,99925 years
    $60,000 and above30 years

For more information on repayment terms, call TG at (800) 222-6297 or send TG an email message.

Back to Top

Payment Methods

TG accepts many forms of payment for your defaulted student loan. The various payment methods and addresses are listed below:

  • Credit card, debit card, or autodraft:
    Make payments online via myTG. TG does not charge a fee for autodraft payments; however, you may want to check with your financial institution about any fees it may charge. Credit and debit card payments will be assessed a processing fee by our payment processing service provider of $6.00 per transaction. The total charge (your payment plus the processing fee) is disclosed to you before the transaction is authorized so you may cancel before any charges are incurred. Your account may also be eligible to set repayment terms and schedules if it is not already referred to a collection vendor or has entered into administrative wage garnishment.
  • Check, money order, or cashier's check:
    • Mail (U.S. Postal Service)
      P.O. Box 659602
      San Antonio, Texas 78265-9602
    • Overnight delivery
      3500 Wadley Place
      TG Mail Center, Ste. 303
      Austin, Texas 78728-1279
    • In our lobby during regular business hours (M-F, 8:00 a.m. to 5:00 p.m., Central Time)
      301 Sundance Pkwy.
      Round Rock, Texas 78681
    Note: Please include your TG account number with your payment to ensure proper crediting. If you do not know your TG account number, call TG at (800) 222-6297 or send TG an email message.
  • Western Union® Quick Collect®:
    The fee is $12.95 per transaction. This process can be posted to your account the same day as the transaction if received in our office before 2 p.m. Central Time. Locate a Western Union office near you. (Please list "Texas Guaranteed Student Loan Corporation" in the Pay To field and "TGSLC" in the Code City field. Use your TG account number in the Your Account Number field on the WUQC form.)

For more information on payment methods, call TG at (800) 222-6297 or send TG an email message.

For non-payment correspondence, please use TG's general correspondence address: P.O. Box 83100, Round Rock, TX 78683-3100.



Here are other documents located on www.tgslc.org that you may be interested in:

Back to Top