Student Loan Questions (defaulted loans)

[brklyn]

I've defaulted on my Student Loans and they have now been turned over to a 3rd. party company. I have been in contact with the company and they have given me 3 options on repaying a 29k loan:

 

1. Option 1: Pay 24k in one lump sum

 

2. Option 2: Pay 3k down and then pay $450 per month until the loan is paid off.

 

3. Option 3: 0 down with $650 per month in payments.

 

Now if I agree to one of the last two options with on time payments for the next 9 - 12 months they promise to remove the late/default status and change it back to a normal "paying as agreed" status. The loan will then be sold to another company for continued payment. Seeing as I don't have the 3k to pay down now I will have to go with the $650 per month. My questions are as follows:

 

* Should I get the promise of "changing my loan status from "default" in writing from them before I agree to payments?

 

* Agree to these terms? In looking at posts from others $59k + loans the monthly payments are only a bit higher than what they are offering. Can I get a better payment that $650 per month?

 

* If they do agree to change the status of my loans how does this debt look on my credit when trying to purchase a house? Is this considered good debt or just the same as all debt?

 

There's tons of good info on this site, thanks for everyone's effort on supplying us all with this information.

[LynnInMN]

I've defaulted on my Student Loans and they have now been turned over to a 3rd. party company. I have been in contact with the company and they have given me 3 options on repaying a 29k loan:

 

1. Option 1: Pay 24k in one lump sum

 

2. Option 2: Pay 3k down and then pay $450 per month until the loan is paid off.

 

3. Option 3: 0 down with $650 per month in payments.

 

 

 

Now if I agree to one of the last two options with on time payments for the next 9 - 12 months they promise to remove the late/default status and change it back to a normal "paying as agreed" status. The loan will then be sold to another company for continued payment. Seeing as I don't have the 3k to pay down now I will have to go with the $650 per month. My questions are as follows:

 

For starters NO downpayment is required for rehab which is what they are offering.

 

* Should I get the promise of "changing my loan status from "default" in writing from them before I agree to payments?

 

It is already in writing...it is called the Higher Education Act. However only the guarantor will remove the defult tradeline. The original guarntor/lender is under to requirement to change their tradeline.

 

* Agree to these terms? In looking at posts from others $59k + loans the monthly payments are only a bit higher than what they are offering. Can I get a better payment that $650 per month?

It depends what you consider a better payment. If you can afford $650 for the 9 months, it will end up giving you a lower payment for the balance of the loan. If you can't afford it, under the HEA you are entitled to "reasonable and affordable" payments. Generally qualify payments for a rehab are at 1%.

 

* If they do agree to change the status of my loans how does this debt look on my credit when trying to purchase a house? Is this considered good debt or just the same as all debt?

 

There's tons of good info on this site, thanks for everyone's effort on supplying us all with this information.

[malayna]

are these federal student loans, or private loans? I ask, because when my private loans went into default, those are the types of options I was given. Private loans function a little differently than federal loans.

[LynnInMN]

are these federal student loans, or private loans? I ask, because when my private loans went into default, those are the types of options I was given. Private loans function a little differently than federal loans.

 

Since they are discussing 9-12 months of payment for rehabbing a loan, they would have to be federal.