CCC Student Loan Counseling & Education Debt 3

Question 1

A federal student loan enters official default status after how many consecutive days of non-payment?

Accepted Answer

270 days

Answer

Federal student loans are considered in default after 270 days (approximately 9 months) of missed payments, at which point serious consequences such as wage garnishment can begin.

Question 2

What is the primary credit-related benefit of successfully completing federal student loan rehabilitation?

Accepted Answer

The default notation is removed from the borrower's credit report

Answer

Upon successful rehabilitation, the default is removed from all three major credit bureaus' reports, though late payment history prior to the default remains.

Question 3

How many consecutive voluntary, reasonable, and affordable monthly payments must a borrower make to rehabilitate a defaulted federal student loan?

Accepted Answer

9 payments

Answer

Federal student loan rehabilitation requires 9 consecutive on-time monthly payments within 10 consecutive months to restore the loan to good standing.

Question 4

How does Direct Loan Consolidation differ from loan rehabilitation as a remedy for defaulted federal student loans?

Accepted Answer

Consolidation combines loans into a new loan resolving default; rehabilitation restores the original defaulted loan to good standing

Answer

Consolidation pays off the defaulted loan by creating a new Direct Consolidation Loan, resolving default; rehabilitation restores the original loan's good standing and uniquely removes the default notation from credit reports.

Question 5

Under income-driven repayment plans, what is the minimum monthly payment a borrower may be assigned if their income is below a certain threshold?

Accepted Answer

$0 per month

Answer

Income-driven repayment plans can result in a $0 monthly payment for borrowers whose income falls below 150% (or 225% under SAVE) of the federal poverty guideline, and these $0 payments still count toward forgiveness.

CCC Practice Test

CCC Practice Test

CCC Student Loan Counseling & Education Debt 3