Student Loans, Late Payments and Credit Reporting. Options

[LynnInMN]

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/policy/highered/leg/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.

[Googie]

[breeze]

Made sticky by member request

[evidenceofevolut...]

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?

[Bassim]

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.

[Epiphany1]

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.

[Stryker]

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.

[minnie mouse]

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.

[DramaQueenLucy]

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!

[LynnInMN]

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.

[ellesig4]

This answered a lot of my questions actually thanks!