Student Loan Issues

Repaying Defaulted Loans

• Rehabilitation
• Reinstatement
• Consolidation
• Repayment Terms
• Payment Methods

Rehabilitation

Rehabilitation is a program to remove your loan(s) from a default status. In addition to removing a default status from your loan(s), TG will also request that the nationwide consumer reporting agencies remove the default status from your credit history. To rehabilitate your loan(s), you must make nine voluntary, on-time, full monthly payments during a period of 10 consecutive months. Generally, upon completion of the rehabilitation program, you are given 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.

To complete the rehabilitation and remove the default status, a lender must purchase your loan(s). TG currently has regular monthly loan sales to rehabilitating lenders; however, the purchase of your loan(s) for rehabilitation is at the discretion of the lender. Therefore, you may be required to continue making scheduled payments until a rehabilitating lender purchases your loan(s). Once your loan(s) has been purchased, the default status is removed from your credit history.

• 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.
  • Your payment amount and due date must be approved by TG.
  • 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 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.
  • Our current rehabilitation lenders are:
    
    • Student Assistance Foundation (College Savings Bank)
      Phone: 800-852-2761 
      P.O. Box 5209
      Helena, MT 59604-5209
    • ACS Education Services (East West Bank) 
      Phone: 800-835-4611
      P.O. Box 371834
      Pittsburgh, PA 15250-7834
    • AES (Sun Trust Bank) 
      Phone: 800-233-0557 
      P.O. Box 2461
      Harrisburg, PA 17130-0001
    • Nelnet (SACU)
      Phone: (888) 486-4722
      P.O. Box 2970
      Omaha, NE 68103-2970
• Rehabilitation benefits
  
  • Upon completion of the rehabilitation program, TG will request that the nationwide consumer reporting agencies remove the default status on your rehabilitated loan(s) from your credit history. Please allow 30 to 45 days for nationwide consumer reporting agencies to update their records.
  • You will regain eligibility for any remaining deferments and forbearances for which you may be eligible (additional criteria apply).
  • You will regain eligibility for additional federal student aid, provided that you have no other student loans in default.
  • 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.

For more information on the TG’s Rehabilitation Program, call TG at (800) 222-6297 or send TG an e-mail message.

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 on your 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 e-mail message.

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 you are not subject to a judgment secured through litigation or an order of administrative wage garnishment on a federal loan.

  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.
  • Generally, you may select from available repayment plans with terms to fit your needs, including: Standard, Graduated, Extended, Income-Contingent, and Income-Based plans.
  • You may be eligible for the Public Service Loan Forgiveness Program.
  • 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.

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

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 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.

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

Payment Methods

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

• 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 78728-1244
  • In our lobby during regular business hours
    301 Sundance Pkwy.
    Round Rock, Texas 78681
• 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.
• 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.)
• Bank-to-bank wire transfer:
  This is an electronic funds transfer from your bank account to TG’s bank account. TG does not charge for this service; however, your bank may charge you a fee. Please contact TG for wiring instructions.

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

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