Ok, I've got $120K in loans (Stafford sub and unsub). Half are in default (because of an error with TSAC (and then my frustration with them)) and the other half are in deferment. I'm trying to get things straightened out so I can ultimately get on the income contingent repayment program.

I'm working with a collection agency who is pushing me to go directly into a Direct loan with income contingent repayment plan. My hesitation is that this will not remove the negative notation on my credit report.

My question is, if I want the negative removed, I should rehab first right? If this is correct, how do they determine the payment amount for rehab payments? I own my own business (which is struggling right now), and basically had a very close to zero adjusted gross income last year, and this year so far is even worse.

Is there a cap (I've heard 20%) that they can demand for rehab payments....is there any federal mandate for this, or is this just a rumor I heard? Basically I can't afford to pay much per month as we're struggling, and have the tax records to prove it.

I appreciate any help!

Seriously, no one can help with my question?