In 2014, Scott Nailor, a high school English teacher from Scarborough, Maine, went more than 270 days without making a payment on his student loans and so ended up in default. Nailor couldn't keep up with his loan payments while balancing other kinds of debt and providing for his family so, in addition to defaulting, he and his wife filed for bankruptcy.
Nailor had struggled to keep up with his debt since 2000, when he graduated from college owing $35,000. When he stopped making payments over a decade later, his balance had swelled to $55,000, thanks to continually accruing interest.
After he defaulted, Nailor decided that rehabilitating his loans was the best way to get back on track. Federal student loans in default are eligible for rehabilitation, a process that restores loans to good standing after nine monthly payments to a collection agency contracted by the Department of Education.
Student loan rehabilitation programs are one way for borrowers to move forward with repayment after defaulting on federal student loans. But many borrowers don't fully understand the risks, experts say. Since rehabilitation can add a significant amount of money to your balance, the drawbacks can outweigh the benefits and even put borrowers at risk of defaulting again.