Rehab Interest Rate?

Anonymous · ‎06-21-2015

For those of you who have already finished the REHAB process, could you explain how the interest rate is determined. I inititally got my federal loans in 2005 with an interest rate at 2%. Since default and now rehab, I am wondering if the new lender picks up my loans, will they change the interest rate or does it stay the same? If it does change, wont I have to sign and agree to the change before accepting it? Also, can you deny a lender and try to acquire a different one if its not to your liking? Thanks for any help!!

InvincibleSummer3 · ‎06-22-2015

@Anonymous wrote:
For those of you who have already finished the REHAB process, could you explain how the interest rate is determined. I inititally got my federal loans in 2005 with an interest rate at 2%. Since default and now rehab, I am wondering if the new lender picks up my loans, will they change the interest rate or does it stay the same? If it does change, wont I have to sign and agree to the change before accepting it? Also, can you deny a lender and try to acquire a different one if its not to your liking? Thanks for any help!!

The interest rate will be the same as the one you had when the loan originated.

I don't believe you can deny a lender. It's rather like a mortgage, where they get picked up en masse by new lenders all the time. Is there a reason you feel like you'd need to do that? Most are about the same - as long as you are never, ever late going forward and are paying as agreed, they'll stay out of your hair.

Anonymous · ‎06-22-2015

THanks for the answer! One more question. Some say the interest and collections costs will be removed on Direct Loans, but some sites say up to 18% of initial principle balance can added. When new lender picks up loan, will the extra costs still be added, or will it revert back to priniciple amount and only have that due?

InvincibleSummer3 · ‎06-23-2015

@Anonymous wrote:
THanks for the answer! One more question. Some say the interest and collections costs will be removed on Direct Loans, but some sites say up to 18% of initial principle balance can added. When new lender picks up loan, will the extra costs still be added, or will it revert back to priniciple amount and only have that due?

That might be a YMMV situation. I don't recall a huge leap in my balances like that, but to be honest the fact that the loans were in default at one point doesn't put a borrower in a position of power. There are serious consequences to defaulting, and rehab can mitigate that somewhat but it's not a clean getaway. It's still vastly better than having defaulted loans hanging over your head for the rest of your natural life.

Anonymous · ‎06-23-2015

I totally agree. Look forward to having these rehabbed. Just wanna make sure I know as much information as I can, to prepare accordingly.