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Student Loans, Late Payments and Credit Reporting.


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31 replies to this topic

#1 LynnInMN

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Posted 14 June 2007 - 08:45 AM

This question comes up almost daily and we need a sticky.

If you are late on your student loan, or you default, you cannot expect goodwill from your lenders as they are required (by law...see below) to report factually and accurately. Student loans are a complely different animal to credit card and other consumer debt so don't expect the same rules to apply.

If you default or your loan is sold expect those lates to remain for 7 years. If you consolidate, the lender will not remove the lates. If you rehab, the original lender who default you is under no obligation to delete or update your tradelines when you complete the rehab program.


http://www.ed.gov/po...g/hea98/HR6.pdf


QUOTE
Notwithstanding paragraphs (4) and (6) (FOOTNOTE 1) of subsection (a) of section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)(4), (a)(6)), a consumer reporting agency may make a report containing information received from the Secretary or a guaranty agency, eligible lender, or subsequent holder regarding the status of a borrower's defaulted account on a loan guaranteed under this part until -


(1) 7 years from the date on which the Secretary or the agency

paid a claim to the holder on the guaranty;

(2) 7 years from the date the Secretary, guaranty agency,

eligible lender, or subsequent holder first reported the account

to the consumer reporting agency; or

(3) in the case of a borrower who reenters repayment after

defaulting on a loan and subsequently goes into default on such

loan, 7 years from the date the loan entered default such

subsequent time.



#2 breeze

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Posted 14 June 2007 - 11:36 AM

Made sticky by member request

#3 evidenceofevolution

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Posted 12 March 2008 - 07:49 PM

Lynn,

I have a quick question. I had two loans from AES or PHEAA that were guaranteed and they went into default. Terry is handling them now. The seven years is almost up next year in february. WIll they get removed after the seven or do these loans stay indefinitely on my record.

One of them was for 500 dollars and I settled for 300. Hes supposed to send me a letter saying they will remove it if I pay it.

The other is for 5000 and he wants to put me on a soft collection program. Should i just wait the 7 years on the ladder in hopes that it will go away or work out a payment plan under the condition that they will mark it as current and paid?

#4 Bassim

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Posted 22 June 2008 - 09:46 PM

This is interesting. I defaulted on my student loans, and they went to the Fed's collection agency. I immediately called them and began what they called a "loan rehabilitation." At the end of 9 months of payments, they removed the collection, and it appears as an installment account that has never been late. It states that it was opened in 2004, but the rehab process just ended this year.

Before starting the rehabilitation, I had not made a single payment on my loan for at least a year. So I guess the moral of the story is that there is hope with student loans.

#5 Epiphany1

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Posted 30 June 2008 - 02:53 PM

I may be dense and can't see the forest for the trees, but from this post, I get that there is nothing that can be done for lates on a student loan. Is that true or did I miss something?

BTW, I am a newbie who has been a long time reader.

#6 Stryker

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Posted 01 July 2008 - 12:30 AM

I may be dense and can't see the forest for the trees, but from this post, I get that there is nothing that can be done for lates on a student loan. Is that true or did I miss something?

BTW, I am a newbie who has been a long time reader.


Nothing is impossible, but I truly believe they are the some of the toughest baddies to deal with.

#7 minnie mouse

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Posted 22 July 2008 - 05:19 PM

I'm so confuse. My student loan is being reported from the original lender (defaulted), Texas Guaranteed (defaulted), and now US Dept of Education. Although I had 2 loans, TG and Wells Fargo appear on my report 4 different times. Can I request that 2 of the entries be deleted? The info is the same.

#8 DramaQueenLucy

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Posted 05 November 2008 - 09:56 PM

I had a student loan years ago and I mean like 16 years, that I defaulted on I get a call tonight saying that they knew where I work and are going to garnish my pay...wth? It has been a very long time....I have no idea who has held it for so long but the collection place called a few weeks ago to my place of employment. Is there no way to get around this? After all these years I had forgotten about it, thought that it was part of my bankruptcy when I divorced my ex but it wasn't. I would hate to find out what the late fees are after all this time? Why would they wait until now to look for me to pay the loan? I am going to try to send a letter but I'm not sure how much good it will do!

#9 LynnInMN

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Posted 11 November 2008 - 11:36 AM

I had a student loan years ago and I mean like 16 years, that I defaulted on I get a call tonight saying that they knew where I work and are going to garnish my pay...wth? It has been a very long time....I have no idea who has held it for so long but the collection place called a few weeks ago to my place of employment. Is there no way to get around this? After all these years I had forgotten about it, thought that it was part of my bankruptcy when I divorced my ex but it wasn't. I would hate to find out what the late fees are after all this time? Why would they wait until now to look for me to pay the loan? I am going to try to send a letter but I'm not sure how much good it will do!


You should probably have started a new thread instead of putting this in the stick section.

Student loans have no SOL and have not been eligible for BK discharge in over 10 years. If they have verified your employment, you need to call them and negotiate a payment plan to avoid being garnished. DO NOT WRITE...they will not negotiate in writing and since they so not need a court order to garnish your wages and have already threatened to do so, you do not have much time.

#10 ellesig4

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Posted 29 December 2008 - 01:38 PM

This answered a lot of my questions actually thanks!

#11 riverafamily6

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Posted 20 December 2009 - 03:41 PM

I had a student loan apparently in 2004 (I was unaware of it...long story). But it was sent to Fed. Collection Feb. 2009. No phone call, no letter, no notice. They just placed it on my credit file as an open date of February 2009. Is that legal?

#12 Rebuilding2010

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Posted 06 May 2010 - 03:37 PM

What if... you don't remember having a late payment, and if you did, you're pretty certain you weren't aware you had to pay yet.

In other words, how do I go about verifying that it actually was a late payment. Should I just email direct loans?

#13 Stranger

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Posted 16 July 2010 - 06:22 AM

Hello! I am new to this forum and I joined only because I need to ask something. I currently have student loan from a bank for which I believe my University is the guarantor. What's more, I also have a loan from my University which is based on a promissory note. Now, I am facing a difficult situation and there is possibility that I might default on both of my loans. Furthermore, I personally do not posses any assets (neither physical nor of any kind). What can happen to me if I default?

#14 Hawksfan21

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Posted 10 January 2011 - 11:47 AM

This answered a lot of my questions actually thanks!


I agree, this was also very helpful to me! It's hard to get these kind of questions answered but this made it a lot easier.

#15 BoostMyScore

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Posted 18 February 2011 - 07:45 PM

I didn't default on my student loan with Nelnet, but due to a botched forbearance, I was making my normal payment but was still behind on the past due total of $2500. I made my regular monthly payments but it didn't do anything to the past due amount. Nelnet reported 120+ day lates to the CRAs for 8 months.

For the past 4 months, I have tried several methods of getting the lates removed with no success. I will keep trying, but I agree that student loan late marks are the hardest negatives to remove. My nearly 700 FICO score would be closer to 800 without those.

Nelnet continues to torment me each time I look at my credit reports.

#16 PlatinumDebit

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Posted 24 February 2011 - 01:06 AM

Perhaps the Federal Direct Loan Consolidation Program could help with lates on credit? That's what I'm doing to get my default student loans off the CAIVRS (the 4th and less know credit report) so I can buy a house via FHA. Good Luck!

#17 vidarsp

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Posted 31 May 2011 - 11:54 PM

hello,
i needed some direction on what to do if anything could be done about three of student loans....
first, when I pulled my report those particular three were indicated as POSTIVELY NEGATIVE ACCOUNTS, however there were recently transferred, bought or sold to another lender but they are still located as such, payment was never made on the accts, due to deferment and when deferment was up, they were transferred, how can I get them to change from the current status?

#18 chigirl212

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Posted 04 September 2011 - 01:35 AM

Back in 2007 I wrote a goodfaith letter and spoke with the OC of my loans. Told them I would pay past due and sent them a cashiers check and they removed lates. Just remain persistent, positive, and proactive anything is possible if you believe it can be done. Dont' Give Up! ;)

#19 rohan

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Posted 09 September 2011 - 07:40 PM

Back in 2007 I wrote a goodfaith letter and spoke with the OC of my loans. Told them I would pay past due and sent them a cashiers check and they removed lates. Just remain persistent, positive, and proactive anything is possible if you believe it can be done. Dont' Give Up! ;)



would you share what kind of onversation you had when you spoke with them??


and also the letter if you have a copy. I see hope.

Edited by rohan, 09 September 2011 - 07:40 PM.


#20 mallaparte

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Posted 16 September 2011 - 10:23 AM

Did anyone ever deal with “University Account Services”? Few years ago I went to one of those for profit colleges and since I couldn’t find a job with the fake degree I got from them I ended up defaulting on my student loan. I was able to make payment two years ago and finally rehabilitated my loan. I still receive a bill from University accounting claiming I owe $2000 to that “College”. I strongly believe that I was the victim of a scam, and that the advisors in those for-profit colleges are trained scammers who would accept anybody as long as he can sign his name on a contract. I learned that University Account Services is a bill collector often used by colleges to collect on a debt. The last payment I made on that bill was five years ago, which means the statute of limitation has already expired. Enrolling in that “college” was the worst mistake I have ever made and I certainly don’t want to pay them a dime if I legally don’t have to. Could someone tell how to proceed in order to make sure whether it was a written contract (SOL 5 years) or a promissory contract (SOL 6 years)? Is there a way out of this? Once I know for sure is it possible for me to send a “cease and desist letter” never to be annoyed by them again?

Thank you for your advises

#21 JLew

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Posted 16 September 2011 - 01:19 PM

I


Back in 2007 I wrote a goodfaith letter and spoke with the OC of my loans. Told them I would pay past due and sent them a cashiers check and they removed lates. Just remain persistent, positive, and proactive anything is possible if you believe it can be done. Dont' Give Up! ;)



would you share what kind of onversation you had when you spoke with them??


and also the letter if you have a copy. I see hope.



I would like to know this as well.....

#22 Venturion

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Posted 28 November 2011 - 12:58 PM

After a quick search, wondering if a non-hardship forbearance is reported as such and has any negative credit impact. I've never been late and was just recently presented with the forbearance option. I don't want to take it unless it's credit neutral. TIA for any thoughts.

#23 21th street

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Posted 09 October 2012 - 08:56 PM

evidence of Evo: who is Terry? How can he/she help? How can others contact him/her?

Thanks in advance.

Lynn,

I have a quick question. I had two loans from AES or PHEAA that were guaranteed and they went into default. Terry is handling them now. The seven years is almost up next year in february. WIll they get removed after the seven or do these loans stay indefinitely on my record.

One of them was for 500 dollars and I settled for 300. Hes supposed to send me a letter saying they will remove it if I pay it.

The other is for 5000 and he wants to put me on a soft collection program. Should i just wait the 7 years on the ladder in hopes that it will go away or work out a payment plan under the condition that they will mark it as current and paid?



#24 TheBlueberry

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Posted 28 October 2012 - 01:30 AM

The bank where I have my student loans reported three lates to the credit bureaus while I was on deferment! I have asked the bank investigate this and they sent me a letter stating that they are accurate.


What are my options here? It's very frustrating since they are wrong and I was on deferment. All they did was sent a plain letter with no evidence.

Any help is greatly appreciated!

#25 billyd

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Posted 28 October 2012 - 03:04 PM

The bank where I have my student loans reported three lates to the credit bureaus while I was on deferment! I have asked the bank investigate this and they sent me a letter stating that they are accurate.


What are my options here? It's very frustrating since they are wrong and I was on deferment. All they did was sent a plain letter with no evidence.

Any help is greatly appreciated!


Did you get a backdated deferment? If so, the bank will argue they are accurate. However, the Federal Trade Commission and the US Department of Education's opinion is that a backdated deferment acknowledges a time period when no payments were due where negative credit history must be removed. If they wanted to reported "accurate" as they have stated then they should not have granted you a backdated deferment. The FTC's letter on the matter is quite clear, they can't keep a file on you saying you're up-to-date and yet keep outdated information on you with the credit bureau because "it was accurate at one point in time". This goes against the FCRA's 623 statute.

Remind them of their obligations under the FCRA to report "accurate" and "updated" information.

Edited by billyd, 28 October 2012 - 03:04 PM.





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