Defaulted Loan Rehabilitation and Good Standing

The consequences of default are far reaching and affect a borrower's life for many years to come. However, if a borrower has defaulted on their federal student loan, there are three options to bring that loan back into good standing.


The quickest way to bring defaulted loans out of default is to pay the loan in full. Borrowers may contact the Michigan Guaranty Agency to pay off their loans in full by calling 800-642-5626.

Borrowers may make payments by credit card or check over the phone by calling 800-642-5626 from 7:30 AM to 9:00 PM Monday through Friday and from 9:00 AM -1:00 PM on Saturday.


To rehabilitate a loan, the borrower must arrange to make nine (9) voluntary monthly payments. After the ninth payment, MGA will arrange with a lender to have the loan purchased and removed from default. Payments must continue past the 9th payment for the borrower to remain eligible for the rehabilitation of the loan. Once a lender purchases the defaulted loan(s) it is placed back into good standing. Borrowers are then eligible to receive deferments for which they qualify as well as forbearance if needed. As an added benefit of the rehabilitation process, MGA will reduce the amount of the collection costs that were added at the time of default. In addition, MGA will cease all negative reporting of the loans on the borrower's credit report.

Note: Adverse credit will be deleted within 60 days of repurchase. Please allow an additional 30-60 days for credit bureaus to update their systems.

Borrowers must contact the Michigan Guaranty Agency (MGA) to (1) enroll in loan rehabilitation, (2) establish satisfactory monthly payments, and (3) request and complete the Rehabilitation Disclosure Statement.

Call 800-642-5626 to sign up for loan rehabilitation today.


Borrowers may wish to seek loan eligibility reinstatement by making six monthly on-time voluntary payments to the Michigan Guaranty Agency. Once the borrower has completed six on-time payments over the course of six months, the borrower will regain Title IV or loan eligibility.

After a borrower has had their eligibility reinstated, they must continue to make payments on their defaulted loans even while they are in school. Please note that unlike loan rehabilitation, these loans will remain in default and the borrower will need to continue to make on-time payments each month to retain eligibility.

Borrowers must contact the Michigan Guaranty Agency (MGA) to (1) initiate the loan eligibility reinstatement process and (2) establish a satisfactory monthly payment.

Call 800-642-5626 to sign up for loan eligibility reinstatement today.