garnishment and financial aid

[VibrantEcho]

I have a small student loan balance (under $3k) from 2008 that went to collections and is now being paid back via wage garnishment. Do I have to pay this back in full, or wait a certain amount of time before I can qualify for new financial aid? I'm looking at going back to school (for real this time ) starting winter or spring term 2011, and the school I'm considering is not cheap.

[Saria]

You'll need to start making monthly payments on top of the garnishment. Your best bet is to enter into a rehab agreement, but you'll regain eligibility for additional aid before the rehab is complete. Of course, it would be a good idea to finish the rehab anyway.

 

This will explain your options: http://www2.ed.gov/offices/OSFAP/DCS/going....to.school.html

 

It's important to also note that consolidation won't be an option in your situation, as you cannot consolidate a defaulted loans once they've started AWG, unless those regs have been recently changed.

[bearnecessities]

It's important to also note that consolidation won't be an option in your situation, as you cannot consolidate a defaulted loans once they've started AWG, unless those regs have been recently changed.

 

Could you direct me to the regs that initially stated this? I've been searching and can find nothing. I've actually applied for a Direct Loans consolidation and the status says this:

 

As of today, August 28, 2010, your combined app/P-note application is in cert status. Your loan consolidation application/promissory note was received on July 16, 2010. We sent a request to your current lenders on August 6, 2010 for the exact payoff amount of your loans. When we receive a response, we will mail you a loan statement indicating loans ready for payoff.

 

I've been garnished for a couple of years already and was hoping to get some relief from this.

 

Please forgive me for hijacking. I can make a separate post if necessary.

[bearnecessities]

Never mind, I found it in the Higher Ed Act. Now to figure out if that has been changed.

[snowpuppy]

Never mind, I found it in the Higher Ed Act. Now to figure out if that has been changed.

 

A LOT of things have gotten wacky at Direct Lending. They have hired many former FFELP lenders to do their servicing so you may wind up with a contract employee and not a real gov't employee of Direct Lending.

 

Let it play itself out and if it's to your advantage to consolidate and they allow it, count your blessings that you did it at a time when they were in a mess.

[bearnecessities]

Fingers crossed! I'll be sure to update when I hear something.

[VibrantEcho]

You'll need to start making monthly payments on top of the garnishment. Your best bet is to enter into a rehab agreement, but you'll regain eligibility for additional aid before the rehab is complete. Of course, it would be a good idea to finish the rehab anyway.

 

This will explain your options: http://www2.ed.gov/offices/OSFAP/DCS/going....to.school.html

 

It's important to also note that consolidation won't be an option in your situation, as you cannot consolidate a defaulted loans once they've started AWG, unless those regs have been recently changed.

I'm back, and I don't know if I'm more or less confused.

 

Via the link you provided, I read this:

 

Repaying Defaulted Student Loans Held By a Guaranty Agency

 

Under the Federal Family Education Loan (FFEL) Program, after your student loan is placed in default by the holder of the loan, an insurance claim for the amount of the loan is paid by the guaranty agency (the organization that administers the FFEL Program for your state) to the holder of the loan. To find out more about your repayment options for your loan held by a guaranty agency, please call the agency servicing your loan.

 

Which I believe is what my situation falls under, as I know the garnishment payments are being sent to ECMC. I plan to call on Monday and just lay out my situation and see what they say, but would like some idea of what to expect?

 

ALSO...

 

According to NSLDS, my outstanding loans total $1860 and my outstanding interest is $3. Why is ECMC collecting something like $2800 and change?? I realize there are fees and whatnot, but a thousand bucks' worth?

[LynnInMN]

Collections fees run up to 24%.

 

Because a garnishment is in place, they will not regain financial aid eligiblity until the rehab is funded. The 6 payment rule does not apply.

[bearnecessities]

I wanted to update my status on this. Today the garnishment was not taken out of my check and they refunded the amount from last week. The Direct Loans status still says it is in cert status but the fact that the garnishment stopped seems like a really good sign.

[bearnecessities]

I wanted to update my status on this. Today the garnishment was not taken out of my check and they refunded the amount from last week. The Direct Loans status still says it is in cert status but the fact that the garnishment stopped seems like a really good sign.

 

Today I got the letter from Direct Loans saying they will be paying off the lenders in 10 days. So, I don't know if it was a glitch or if they have changed the rules but apparently you can consolidate after garnishment without going through rehab first. This is such a relief for us. The garnishment was taking $600 every month and now our payment will be around $250.

[snowpuppy]

Hold your breath until you get all the final paperwork but ITA, it seems like a very good sign.

As I said, sometimes their screw ups lately are quite beneficial to the borrower.

 

Extra $ to help you get back on your feet is a good thing, eh?

[Hillbilly with Credit]

How do i do this. I have US Department of Education TL on my report, it says "OK".. Also says 300 month term, and Income Contingent. ive never gotten a bill since i paid only $15 some time ago.... I have SLs in Default being collected by an HESAA and they are NOT Updating my TL, and the Defaulted TLs are still on there (from Sallie Mae) and im wondering why the HESAA has NOT reported my payment, but they have reported my Default status.

 

It almost seems as if the 300 month US Dept of Ed is a mistaken TL.