Reasonable and Affordable Payments

Reasonable and Affordable Payments

Rehabilitating a defaulted loan or making satisfactory payment arrangements requires borrowers to make "reasonable and affordable" payments. The holder of a federal Direct Loan or FFEL Program loan determines on a case-by-case basis what constitutes a reasonable and affordable payment on defaulted loans. Loan holders consider disposable income and such expenses as housing, utilities, food, medical costs, work related expenses, dependent care, and other federal education loan debt. Borrowers are then provided with a written statement of the payment and an opportunity to object to those terms.

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