The Loan Rehabilitation Income and Expense Information form (OMB No. 1845-0120) is the federal form you use to request a lower rehabilitation payment when the standard 15 percent calculation is more than you can afford. You only need it if you’ve objected to the payment amount your loan holder quoted; otherwise the standard formula governs and no form is required. The current version of the form expires June 30, 2026.1Federal Student Aid. Loan Rehabilitation: Income and Expense Information
When You Actually Need This Form
After you request rehabilitation and submit income documentation (a signed IRS Form 1040 or an IRS tax transcript), your loan holder calculates a monthly payment at 15 percent of your annual discretionary income, divided by 12. Discretionary income means your adjusted gross income minus 150 percent of the federal poverty guideline for your family size.2eCFR. 34 CFR 685.211 – Miscellaneous Repayment Provisions The minimum under this formula is $5 per month.
If that number works for you, sign the rehabilitation agreement and start paying. You don’t need the Income and Expense form at all. If the number is too high, tell your loan holder you object. They will then send you this form or direct you to download it.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
One warning before you ask for the alternative calculation: the payment produced by the Income and Expense form can come out higher than the 15 percent figure, not lower. After the review, you choose between the two amounts. If you refuse both, rehabilitation cannot proceed.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Getting the Form
The form comes from your loan holder after you object. If your defaulted loan is with the Department of Education’s Default Resolution Group, that’s who you work with. If a guaranty agency holds a defaulted FFEL Program loan, you work with that agency directly. You can confirm who holds your loan by logging in at StudentAid.gov under “My Loan Servicers,” or by calling the Federal Student Aid Information Center at 1-800-433-3243.4Federal Student Aid. Loan Delinquency and Default
Filling Out the Form, Section by Section
The form has nine sections. Some contain only instructions and definitions; the sections requiring your input need to be accurate and documented. Print in dark ink or complete the form electronically, and format all dates as MM-DD-YYYY.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Section 1: Borrower Information
Enter your name, Social Security number, date of birth, and the account numbers for your defaulted loans. Write your name and account numbers on every page of supporting documentation you attach, so nothing gets separated from your file.
Section 2: Household Income and Monthly Expenses
This is the core of the form. List every source of monthly income: employment wages, self-employment, child support, Social Security benefits, public assistance, and anything else coming in regularly. If your total monthly income is zero, you must explain how you support yourself.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Below the income section, the form lists expense categories: housing, utilities, food, transportation, childcare, medical costs, insurance, and others. Enter what you usually spend each month. Don’t double-count a single expense across two categories, and enter zero for any category that doesn’t apply to you. If you have a necessary expense that doesn’t fit the listed categories, put it under “Other” with an explanation. Unusual expenses get extra scrutiny; the Department of Education decides whether to count them.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Section 3: Family Size
Family size includes you, your spouse, and your children (including unborn children expected before the end of the current calendar year) if those children get more than half their support from you. Other people count only if they currently live with you, receive more than half their support from you, and will continue to throughout the year.1Federal Student Aid. Loan Rehabilitation: Income and Expense Information This number directly affects the alternative payment calculation, so count carefully.
Section 4: Certifications
Section 4 contains the certifications that everything you reported is accurate. Sign and date it. An unsigned form is incomplete.
Section 7: Rehabilitation Agreement
Section 7 is the rehabilitation agreement itself, where you commit to the payment schedule. Sign and date this section too. Typed or electronic signatures are not accepted where a handwritten signature is required.
Section 8: Submission Instructions
Section 8 tells you where to send the completed form, typically by fax or mail to the loan holder that sent it to you. If your loan holder is the Default Resolution Group, the fax number is 1-240-931-3323 and the mailing address is:
U.S. Department of Education
Default Resolution Group
P.O. Box 5609
Greenville, TX 75403-56095Federal Student Aid. Student Loan Rehabilitation for Borrowers in Default: FAQs
If a guaranty agency holds your FFEL loan, send everything to that agency, not to DRG. Use certified mail or keep your fax confirmation as proof of timely submission.
Documentation to Attach
Your loan holder may request proof for any line of income or expense on the form. Gather it before you submit so you aren’t scrambling later. Common supporting documents include:
- Pay stubs or an employer letter for employment income.
- Benefits statements for Social Security or public assistance.
- A court letter or order for child support received or paid.
- Billing statements, lease documents, or receipts for recurring expenses the loan holder questions.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
If your loan holder sets a documentation deadline and you miss it, your rehabilitation request is voided and you start over.
What Happens After You Send It In
The loan holder reviews your income and expenses and calculates an alternative monthly payment. That alternative may be lower than the 15 percent figure, or it may be higher. You then pick between the two amounts and sign the rehabilitation agreement for the one you choose.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Once you sign, the nine-payment clock starts. For Direct Loan and FFEL Program borrowers, you must make nine voluntary payments within 20 days of each due date during a span of ten consecutive months.2eCFR. 34 CFR 685.211 – Miscellaneous Repayment Provisions Federal Perkins Loan borrowers must make all nine consecutively with no gaps.5Federal Student Aid. Student Loan Rehabilitation for Borrowers in Default: FAQs Payments must be voluntary and for the full agreed amount; money taken by wage garnishment or tax refund offset does not count toward the nine.
Common Mistakes That Stall the Form
A few errors reliably derail submissions. Missing signatures in Section 4 or Section 7 void the form. Typed or electronic signatures where handwritten ones are required are rejected. Double-counting an expense (listing a utility bill under both “utilities” and “housing,” for example) invites the loan holder to disallow one of the entries. Reporting zero income without any explanation of how you live will come back for clarification. And attaching documents without your name and account number on each page risks pages being lost from your file.3Federal Student Aid. Loan Rehabilitation: Income and Expense Information Form
Keep a copy of the completed form, every attachment, and your proof of submission. If a question comes up months into the ten-month payment window, that paper trail is what protects your rehabilitation.