RALEIGH, N.C. -- State Employees’ CU has agreed to purchase $25 million in federally insured student loans from the North Carolina State Education Assistance Authority’s Loan Rehabilitation Program.
“Through the purchase of these student loans, SECU is providing the capital to expand the rehabilitation program and thus help even more borrowers in North Carolina’s program earn a fresh start,” said Dr. Steve Brooks, executive director of the North Carolina State Education Assistance Authority.
The Loan Rehabilitation Program gives students the opportunity to reestablish their credit standing, restore federal insurance on their loans and continue their education by successfully completing the Program.
The program helps student borrowers who defaulted on Federal Family Education Loans earn a second chance to repay the loans and repair their credit histories. The federal guarantee of the payment of principal and interest that existed at the time of the original participation in the federal student loan program follows the rehabilitated loan.
The buyer of the loans, in this case SECU, will be reimbursed an average of 97% of the outstanding loan principal and interest if a re-default occurs.
A loan can be rehabilitated once. Student loan borrowers must make nine consecutive voluntary payments at an amount they can sustain into the future in order to qualify for participation in the Student Loan Rehabilitation Program. Upon qualifying, new repayment terms may be available, eligibility for federal and state financial aid is reinstated and the defaulted loan status is removed from the student loan borrower's credit record.
