Can't rehabilitate?

[cljohnr]

I started college in 1994. I attended for 3 semesters before dropping out for personal reasons. I was paying my student loans while not in school. In August 1999, I restarted college. From that point I was in school every semester through August 2004 (BS straight through MS). I decided when I started back I was going to work full time and pay my tuition without taking any new loans, and was able to do so. However, I was not able to pay tuition and student loans, and my loans were declared in default while I was in school. (I thought I had deferred all my loans, but apparently the papers I signed were only for the loans owed directly to the school). The loans in default started wage garnishment while I was in school as well. So now I'm out of school, and have a good job. I've been paying my loans for the past 5 months. I called the lender (SC State Education Assistance Authority) about rehabilitation. The first lady I spoke to didn't even seem to understand the concept, she said I could pay it off, but I couldn't have the negative credit reports removed. I called back and spoke to someone else who informed me that they can't rehabilitate a loan once a wage garnishment has happened, but if I consolidated the loans it would have the same effect. The loans are now listed on my credit report as collection accounts. I was under the impression that consolidation would simply pay these loans off, causing them to be marked as a paid collection, which doesn't help my credit. She insisted consolidation would remove the bad credit. Is this true? At this point, I'm paying $100 per month and the account balance is down to $1100. I cant even get consistent answers from the customer service reps at the state loan division, so I'm looking for information elsewhere.

[cljohnr]

One additional question about these loans. They are reporting as follows on my reports:

 

TU

Account Type: Installment Account

Credit Limit

(High Credit): $2,260

Minimum Monthly Payment: $58

(Terms): Monthly

Date Opened: August, 2000

Date of Last Activity: March, 2005

Date Paid Out: Not on Record

Date Closed: March, 2005

Loan Type: Student Loan

Collateral:

Description: Placed for collection

Current Status: Collection Account

 

EQ

Account Type: Installment

Credit Limit

(High Credit): $430

Minimum Monthly Payment: $11

(Terms)

Date Opened: Not on Record

Date of Last Activity: August, 1999

Description: Collection account Student loan

Current Status: 120+ days past due

 

EX

Account Type: Installment

Credit Limit

(High Credit)

Original Amount: $2,260

Minimum Monthly Payment

(Terms): 120 Months

Date Opened: August, 2000

Date of Status: November, 2000

Last Payment Date: Not on Record

Date Closed

Loan Type: Education Loan

Collateral

Description

Current Status: Account seriously past due date/account assigned to attorney,

collection agency, or credit grantor's internal collection department

 

I took the loans in 1994/1995. Any idea why "Date opened" would be 2000? Also, is there a reason the voluntary, full payments I've made this year would not show on my payment history?

[LynnInMN]

I called the lender (SC State Education Assistance Authority) about rehabilitation.  The first lady I spoke to didn't even seem to understand the concept, she said I could pay it off, but I couldn't have the negative credit reports removed.  I called back and spoke to someone else who informed me that they can't rehabilitate a loan once a wage garnishment has happened, but if I consolidated the loans it would have the same effect.

 

Are you still being garnished??  She did give out wrong info..you can rehab while in garnishment..however you have to make the qualifying 12 payments over and above the garnishment order.  Also, with rehab, the negative tradelines are removed..with consolidation they are just marked paid collection.

 

The loans are now listed on my credit report as collection accounts.  I was under the impression that consolidation would simply pay these loans off, causing them to be marked as a paid collection, which doesn't help my credit.Correct She insisted consolidation would remove the bad credit.Incorrect Is this true?  At this point, I'm paying $100 per month and the account balance is down to $1100.  I cant even get consistent answers from the customer service reps at the state loan division, so I'm looking for information elsewhere.

 

Unfortunately rehabs require a minimum balance to be rehabed, usually around $100. With your payments, your balance may be too low to be considered for consolidation.  I tried finding a South Carolina Education Assistance Authority website thru google but I could not find anthing.  I know NC goes by that title. 

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[cljohnr]

I called the lender (SC State Education Assistance Authority) about rehabilitation.  The first lady I spoke to didn't even seem to understand the concept, she said I could pay it off, but I couldn't have the negative credit reports removed.  I called back and spoke to someone else who informed me that they can't rehabilitate a loan once a wage garnishment has happened, but if I consolidated the loans it would have the same effect.

 

Are you still being garnished??  She did give out wrong info..you can rehab while in garnishment..however you have to make the qualifying 12 payments over and above the garnishment order.  Also, with rehab, the negative tradelines are removed..with consolidation they are just marked paid collection.

 

The loans are now listed on my credit report as collection accounts.  I was under the impression that consolidation would simply pay these loans off, causing them to be marked as a paid collection, which doesn't help my credit.Correct She insisted consolidation would remove the bad credit.Incorrect Is this true?  At this point, I'm paying $100 per month and the account balance is down to $1100.  I cant even get consistent answers from the customer service reps at the state loan division, so I'm looking for information elsewhere.

 

Unfortunately rehabs require a minimum balance to be rehabed, usually around $100. With your payments, your balance may be too low to be considered for consolidation.  I tried finding a South Carolina Education Assistance Authority website thru google but I could not find anthing.  I know NC goes by that title. 

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The garnishment is no longer in effect. I moved to a different state for a job after graduation. The SCSEAA is part of the SC Student Loan Corporation (http://www.slc.sc.edu/). Unfortunately, their webpage doesn't have any information about rehabilitation.

[jeslyn]

I just wanted to clarify: LYNN, I think you mean the minimum balance has to be at least $1,000, not 100. Otherwise, it's not worth it for a servicer to re-purchase the loan. Everything else is correct. Yes, you can rehab. Yes, you have to pay over garnishment. Yes, they are supposed to remove lates/negs after the loan is resold.

 

If you can afford to do it, it's definitely worth it. No other loans allow you this wonderful opportunity. To that, we can only dream

 

 

ETA: The info on rehabilitation is on the US Dept. of Education website.

 

go here: http://studentaid.ed.gov/PORTALSWebApp/stu...glish/index.jsp

Edited May 27, 2005 by jeslyn

[LynnInMN]

Thanks for catching my typo...I did mean to say $1000!