Core Insights - The Department of Education will resume garnishing wages of defaulted borrowers starting in February, affecting over 5 million individuals who have been in default for 270 days or more [1][8] - Borrowers will be notified on January 7 and have 30 days to rectify their situation before wage garnishment begins [2] - Experts emphasize the importance of borrowers taking proactive steps to regain good standing to avoid negative impacts on their credit and financial situation [3] Loan Consolidation - Loan consolidation allows borrowers to combine multiple student loans into a single loan, which can help them exit default [5][8] - To consolidate, borrowers must enroll in an income-driven repayment plan or make three consecutive, voluntary, on-time payments on the defaulted loan [5] - It is important to note that while consolidation brings borrowers out of default, the record of default and late payments will remain on their credit report [6] Loan Rehabilitation - Loan rehabilitation is a longer process but removes the defaulted loan from a borrower's credit report and does not add accrued interest to the balance [7] - To rehabilitate a loan, borrowers must make nine voluntary, reasonable, and affordable monthly payments over ten consecutive months as determined by their loan servicer [9] - This option is crucial for borrowers looking to restore their credit standing without the burden of additional interest [7]