According to recent Department of Education data, in the last quarter of 2017, almost 23,000 borrowers defaulted on their student loans — for the second time. During that same period, a little more than 226,000 borrowers defaulted for the first time.

Since these numbers have been fairly consistent every quarter for the last 2 1/2 years, it’s safe to say that about 10 percent of all borrowers who do get out of default end up re-defaulting. According to the Consumer Financial Protection Bureau, many do so within just two years.

[Read why student loan borrowers should be wary of defaulting again.]

Defaulting even once can have a devastating financial effect. Not only does it have a significantly negative effect on the borrower’s credit report, but it can also result in collection costs as high as 24 percent for most federal student loans and as high as 40 percent for federal Perkins loans.

Thankfully, borrowers can reduce those collection costs by consolidating or rehabilitating out of default, but that won’t be much of a benefit if they re-default a year or two later.

Let’s check the math. A student or parent borrows $45,000 in unsubsidized federal student loans at a 4 percent interest rate and makes no payments and is deemed in default after becoming nine months past due.

After about another two months, the loan transfers to a collection agency, where the agency will start attempts to collect on the loan. At this point, the loan has been accruing interest for approximately five years, so the balance is around $54,000. As an aside, this is why the Student Loan Ranger always recommends borrowers pay their interest while they are in school.

[Discover three benefits of making interest-only student loan payments.]

If the borrower doesn’t make a repayment agreement with the collection agency after 60 days, the agency can add collection costs. Twenty-four percent of $54,000 is almost $13,000, so now the balance is almost $67,000. Take a moment to appreciate how quickly a loan can grow by a third in total.

This new balance would also increase the standard monthly payment from $456 — with a total payback after 10 years of $56,000 — to $678 with a total payback of $81,000. This is why when borrowers tell us they can’t afford to deal with their student loans, we insist that they can’t afford not to.

Rehabilitation’s Role

Now imagine this borrower rehabilitates his loan. Many borrowers are able to rehabilitate their loans with payments as low as $5, due to their financial circumstances. For this example, we’ll use that amount because borrowers in this situation can be most at risk post-default.

Rehabilitation requires an on-time payment for nine consecutive months. Five dollars per month won’t make much of a dent in the loan’s total, especially when you’re accruing almost $200 a month in interest. So even with the significant discount in the collection costs, by the time the rehabilitation is complete, the balance has still risen to about $63,000.

Now, let’s say this borrower can’t make his payments post-rehabilitation. He’ll find himself in the same situation the following year — but with a defaulted balance of $65,000 and a post-collection cost balance of more than $80,000. This is how a student loan balance can almost double only seven years after you’ve borrowed and only three years after entering repayment.

[How to use rehabilitation to recover from student loan default.]

Use Options Wisely

Rehabilitation and consolidation are great tools to help defaulted borrowers get back on track, regain eligibility for student loan benefits, help repair their credit and stop wage and tax refund garnishment. This is true, however, only if the borrower is sure he can afford the student loan payments once the loan is back in good standing.

One way to find out is to use the Department of Education’s repayment estimator to see if any of the payment plans will fit in your budget.

Many borrowers who rehabilitate file financial hardship paperwork to help determine their rehabilitation payment amount. This hardship takes a borrower’s expenses, such as housing and food, into account, which is how many end up with a $5 rehabilitation payment.

The problem with this benefit is that no repayment options take borrowers’ expenses into account once they are out of default. The other problem is that borrowers may only use rehabilitation once per loan, so if the loan defaults again, that option is no longer on the table.

If you’re considering consolidation or the financial hardship form under the rehabilitation program, because you cannot afford the initial rehabilitation payment you were offered, you absolutely should ensure there is a payment plan that will fit your budget post-default.

If there isn’t, you may want to consider paying what you can afford to the loan holder every month — this will help hold off wage garnishment actions — until you are in a situation where you are confident you can maintain your payments once you are out of default. Being in default is certainly not a good thing, but getting out of it only to re-default is even worse.

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When Getting Your Loans Out of Default Is a Bad Idea originally appeared on usnews.com