How to Complete the Financial Disclosure Form for Student Loan Rehabilitation

The Student Loan Rehabilitation Financial Disclosure Form, officially titled the Loan Rehabilitation Income and Expense Form, is what you submit to your loan holder when the standard rehabilitation payment on your defaulted federal student loan is more than you can afford. The loan holder uses the income, household size, and monthly expenses you report to recalculate a lower payment based on your actual cash flow. You can request the form from the U.S. Department of Education’s Default Resolution Group at 1-800-621-3115, or from the guaranty agency that holds your loan if it is an FFEL Program loan.¹

When You Actually Need This Form

You only need the financial disclosure form if the standard rehabilitation payment is unaffordable. That standard payment equals 15 percent of your annual discretionary income divided by 12, where discretionary income is the gap between your adjusted gross income and 150 percent of the federal poverty guideline for your family size and state.¹ If the formula produces a number below $5, the minimum payment is $5.²

Once you tell your loan holder the proposed amount is too high, they must offer you the Loan Rehabilitation Income and Expense form as an alternative.¹ The recalculated payment considers your actual monthly expenses rather than relying solely on AGI, so real costs like medical bills, child support, and housing directly reduce what you owe.

Federal regulations list the expense categories the loan holder must consider: food, housing, utilities, basic communication, necessary medical and dental, insurance, transportation, dependent care, legally required child and spousal support, and other student loan payments.³ The payment cannot be set as a flat percentage of your loan balance or based on anything unrelated to your finances.

If You Are Married

Your spouse’s income is only counted if the spouse contributes to your household expenses. A spouse who does not contribute financially can be excluded from the calculation.³ If you and your spouse file taxes separately, note that on the form; it can significantly reduce the income figure used in the calculation.

Documents to Gather Before You Start

A form submitted without required documentation can be voided entirely, so collect everything before you begin writing anything down.²

Your two most recent pay stubs, dated within the past 90 days. If you don’t have pay stubs, use a signed copy of your federal Form 1040 (both pages) for the most recent tax year or an IRS tax transcript. The 1040 must carry a handwritten signature; typed or electronic signatures are not accepted.⁴¹
Your spouse’s tax return, if you live with your spouse but file separately.¹
Recent bills or statements for housing, utilities, medical costs, transportation, and any court-ordered obligations such as child support. You will enter monthly averages, and the loan holder can ask you to prove any figure.
A written zero-income statement if you have no income, explaining how you cover basic needs (family support, savings, and the like).

Filling Out Each Section

The form itself is not complicated, but small errors lead to inflated payments or outright rejections.

Income

Enter your total gross monthly income, meaning wages before taxes and deductions. If your spouse contributes to household expenses, include their gross income too. List every source: employment wages, Social Security, Supplemental Security Income, workers’ compensation, public assistance, and any other payments you receive.³ Leaving a source off risks having the loan holder discover it during verification and void your agreement.

Family Size

List every member of your household. Family size directly affects the poverty guideline figure used in the calculation. A larger household means a higher deduction from your income, which lowers your payment. Count yourself, your spouse if living together, and any dependents.

Expenses

Use monthly averages. If a bill varies by season, such as heating costs, add up the last 12 months and divide by 12. The form breaks expenses into categories:

Housing: rent or mortgage. If property taxes and homeowner’s insurance are paid separately from your mortgage, do not roll them into this line; list them under insurance or other expenses instead.
Utilities: electric, gas, water, sewer, and basic communication costs like phone and internet.
Food and personal care: the loan holder will compare your figures against IRS National Standards, which allow $839 per month for one person, $1,481 for two, $1,753 for three, and $2,129 for four, covering food, housekeeping supplies, clothing, and personal care combined.⁵
Medical and dental: out-of-pocket costs only. Insurance premiums go on the insurance line.
Transportation: car payments, fuel, maintenance, public transit fares, and parking.
Child and spousal support: court-ordered amounts only. Voluntary payments to family members generally don’t count.
Other student loan payments: payments on federal or private student loans that are not in default.

Double-check that your total expenses don’t exceed your total income unless you can explain the gap, such as drawing on savings or receiving help from family. An unexplained deficit will raise questions and slow processing.

Certification and Signature

The certification statement at the bottom is a legal declaration that everything on the form is true. Sign and date it. An unsigned form will be rejected, and providing false information voids the agreement.²

Where to Send the Completed Form

Where you submit depends on who holds your defaulted loan. For most borrowers with defaulted Direct Loans, that is the Default Resolution Group:¹

Fax: 1-240-931-3323
Mail: U.S. Department of Education, Default Resolution Group, P.O. Box 5609, Greenville, TX 75403-5609
Phone: 1-800-621-3115 to request the form or ask questions

If you have an FFEL Program loan held by a guaranty agency rather than the Department of Education, send the form to that agency instead. Log in to your StudentAid.gov account and check the “My Loan Servicers” section to identify the correct agency.¹

What Happens After Submission

Your loan holder will calculate an alternative payment and mail it to you within 10 business days of receiving the form.¹ For Direct Loans, the regulation requires a written rehabilitation agreement within 15 business days of the determination, including the new payment amount and instructions for objecting if you disagree.²

You must sign and return that rehabilitation agreement to officially start the program. You can sign on paper and mail it back, or accept it electronically if the loan holder offers that option. If you don’t return the signed agreement or miss your first payment, the calculated amount is void and the process stops.

If you think the recalculated payment is still too high, you have the right to object. The loan holder must then recalculate again using only the information you provided on the approved form and any supporting documentation.³

Keeping Rehabilitation on Track

Rehabilitation requires nine voluntary, on-time payments during a period of ten consecutive months.¹ Each payment must be for the full agreed amount and received within 20 days of its due date.³ Partial payments don’t count, and payments collected through wage garnishment don’t count either, because they are not voluntary.

If your finances change during the ten-month window, you can request an adjustment by submitting updated documentation on the same financial disclosure form.³

Involuntary collections such as wage garnishment, tax refund seizures, and withholding from other federal payments may continue during the early months of rehabilitation. They generally stop once you have made at least five of your nine required payments.¹ For a tax refund offset specifically, making the first five payments can halt the Treasury Offset Program’s withholding.⁶ Entering a rehabilitation agreement soon after receiving the default notice may prevent collections from starting at all.

One Rehabilitation Per Loan

Federal regulations limit rehabilitation to a single opportunity per loan. If you rehabilitate a defaulted loan and later default on it again, that same loan cannot be rehabilitated a second time.³ Your remaining options would be consolidation or paying the debt in full. That is why the financial disclosure form matters even for borrowers with very low income: it can bring the payment down to $5 per month and give you a realistic path through the nine payments without a second default waiting on the other side.

1
Federal Student Aid. Student Loan Rehabilitation for Borrowers in Default: FAQs
2
eCFR. 34 CFR 685.211 – Subpart D
3
eCFR. 34 CFR 682.405 – Loan Rehabilitation Agreement
4
Federal Student Aid. Loan Rehabilitation Income and Expense Instructions
5
Internal Revenue Service. National Standards: Food, Clothing and Other Items
6
Federal Student Aid. How Do I Stop My Tax Refund or Other Federal Payments From Being Withheld