For federal student loans, yes in part. After you complete rehabilitation, the Department of Education asks the credit bureaus to remove the record of default. Late payments reported before the loan defaulted stay on your report.
Loan rehabilitation is one of the main ways to get a federal student loan out of default. It is the only option that removes the default notation itself from your credit history.
How rehabilitation works
You agree to make 9 voluntary, reasonable, and affordable monthly payments within 10 consecutive months. The payment amount is based on your income and expenses. When the rehabilitation is complete, the loan is no longer in default and is transferred to a servicer.
What happens on your credit report
According to StudentAid.gov, after the rehabilitation is complete the Department of Education requests that the credit reporting agencies remove the record of default from your credit history. What stays:
- Late payments before the default. Delinquencies reported by your servicer before the loan defaulted remain, subject to the normal 7-year reporting limit.
- The loan itself. It continues as an account in repayment.
Rehabilitation versus consolidation
You can also leave default by consolidating into a Direct Consolidation Loan. StudentAid.gov explains that with consolidation, the record of the default and the earlier late payments remain in your credit history. If cleaning up your credit report is a priority, compare the two options before choosing.
Private student loans
Private loans, such as many Sallie Mae loans, are not eligible for federal rehabilitation. Some private lenders offer their own programs, but credit reporting results depend on the lender’s terms.
What to check afterward
- Pull your reports a few months after completing rehabilitation.
- Confirm the default notation no longer appears.
- Confirm the new servicer is reporting the loan as current.
- Dispute any remaining default notation with each bureau, attaching your rehabilitation completion letter.
If a default remains on your report after a completed rehabilitation and disputes have not fixed it, a free case review can help, with no fee unless we win.
Related
Sources
- StudentAid.gov: Student Loan Rehabilitation for Borrowers in Default FAQs
- StudentAid.gov: Student Loan Default and Collections FAQs
- 15 U.S.C. § 1681s-2(a)(2) and (b) (Cornell LII)
Updated November 2026. This page is general information, not legal advice.