My SL is currently in default. ...just like many other around here...hehehe


So i call to see about the loan rehab program, and AES said instead of rehab, that my loans can be consolidated by Direct Loans, and on an income contingency basis. They said once i sign, that the default status will be removed from my credit report.

So i get the necessary paper work from them but there is no mentioning of interest rate nor payment. I have to confirm info given to them over the phone and sign. there is one additional section asking if I have dependents of which i have 2 daughters.

Don't want to make any hasty decisions here..or sign until i fully understand what I am signing...


thought i would post here before calling an Ombudmen.....


Is going the consilidated through Direct Loans route just as good or better than the loan rehab ? And I am wondering if they will give me today's rate or stick me with the 8.25% i originally committed to.


Any suggestions or commets are appreciated. Please let me know if I am not giving enough information here.


Thanks !

They shouldn't "stick" you with the original interest rate. One of the purposes/benefits of consolidating your student loans is to take advantage of a lower interest rate. This will bring all your student loans to one creditor and locks in whatever the prie rate is now.

My suggestion is do it right now because the rates are going up...

If you consolidate without rehabbing first, the negative information does NOT come off your Credit report. With consolidation your credit report will indicate that the default is paid whereas rehab removes all the negative info.

I would NOT consolidate without going through rehab. If you do, you're not actually gaining anything by consolidating. I dunno if it's true or not, but I was told recently by my school's financial aid office that I wouldn't have been eligible for Title IV benefits if I had consolidated before rehabbing the loans. Even if you don't think you're going to need SLs in the future, you don't want to get cross-wise with them, because I don't think you could get an FHA loan or any other govt loan.

Rehab first; consolidate a year later.

Title IV eligibility is returned as soon as your loans are out of default. It works with either consolidation or rehab.

You can start your consolidationn as soon as you get the letter from the new lender telling you that your loan has been rehabbed.

O.k. so i had time to read the paperwork. The sender is PHEAA who are the originators of my loans. this is not a rehab, but they are giving me the chance to consolidate my loans, with Direct Loans at the same interest rate of 8.25%. They are telling me that after i complete the program (which will take me forever) all defaulted info will be removed from my credit report. As you know, with the rehab....defaulted info is removed after 1yr.


I'm not signing this crap.....I called for a rehab, and they send me this.


I guess it is time to call the Ombudsmen.

DONT DO IT! Interest rates are at about 4.8% right now but they are going up this summer to around 7%. If possible, look into consolidating with a different company (like Sallie Mae) so you can get a better rate.

If you are going to rehab your loans first, don't bother consolidating until the rates go back down. 8.25% is WAY to high to even think about.

I just consolidated with Direct Consolidation Loans (loanconsolidation.ed.gov), through the Dept of Education, which means that I will get today's rate for the term of my loans. If that's what you are talking about, do it before the rate hike!

Amdada,

Was your loan in default ?


all the baddies will stay on my report until the end according to the papers.....but i will call to confirm. I plan on buying a house soon and trying to clean up my CR too.