Is anyone else stuck in rehab unable to consolidate and lock in student loan interest rates before they jump? Rehab is a great program...but you are somewhat in a holding pattern for an entire year unable to do anything strategic with your loans.

I find it ironic that I am currently eligible for more student loan aid while in rehab (fat chance that would ever happen again) but that I am strictly forbidden to act now and lock in a lower interest rate. I think that if you complete the program successfully you should be grandfathered in under the interest rate when you began the rehab program 12 months earlier.

Does anyone else have this problem? I imagine that some people who have defaulted would consolidate w/o rehab under Direct Loans just to get the lower interest rate. Yesterday the CA servicing my rehab told me that I could wait after rehab until rates go down again to consolidate. Yeah, so I could pay under the 10 year repayment plan for what like several years waiting for rates to come down again. I don't think so.

This may not matter to those who owe only several thousand, but to those of who owe the equivalent of a mortgage...this could be a lot of money.

I am in the same boat with the huge loan amount.



Trying to rehab my loans now....but Direct Loans is offering me another chance to consolidate my loans. I would rather the rehab since the default status comes off after completing the 12month rehab.

I feel the same way. I agree that rehab is really a great program which allows you to clean up your credit reports after 12 months. As far as I know, if you go the Direct Loans route it will indicate that your loans have been paid with a zero balance but the negative trade lines will remain for 7 years. I couldn't sleep last night thinking about this. I've been in the rehab program for 6 months. Can you go with Direct Loans to consolidate and lock in the lower rates and then enter another rehab program and start rehab again???

I think more needs to be done to make student loans entries a little more flexible to debtors. It's only going to become more and more of a problem with loan amounts getting outrageous. You can never get rid of student loans...you can only consolidate once. I was going to consolidate once before and was informed that I had to consolidate with my loan originator.

I also think Congress needs to raise the amount of loan interest you can deduct on your income taxes. Previously it was $400, now it's at least $2500. I'm paying thousands more in interest each year than the maximum allowed. Why can you deduct everything that relates to a home buying including mortgage interest, property taxes, loans for repairs, etc. Then you get further rewarded by not owing income tax on profits that you made from the sale.

Unfortunately there is a high rate of non completion of the rehab program.60% of potential rehabs fail. Rehab and consolidation are basically a trade off. Go rehab (which can only be done by loans in default,thus you cannot consolidate and then rehab) and the collection costs are dropped and the lenders bad trade line reflects current status. (Keep in mind that the defaulting lender is NOT required to adjust their trade lines.) Consolidation is closer to being instant gratification. Your interest rate may drop, but the bad trade lines do not. If you loans are old and are near the credit bureaus SOL for reporting, this may be a good option if you are in hurry.

Lynn thanks for your input..I know you've answered questions like this before but what date would trigger the credit bureau for SOL's?

I graduated in 97..had some problems paying my loans in the beginning (lates, etc.) then I had a good period of payment caught everything up from 99-02...and then defaulted in '03. Would the loan date for reporting be from lates I may have had in 98?

I fear the date may be when I defaulted in '03. I'm waiting to get my free credit report after June 1.

I would be willing to bet that the majority of borrowers want to pay their loans off. Unfortunately, payments are just to high and may have caused many to just ignore their debt obligation.


Not sure about anyone else...but I was 26yrs old when i went back to college. Could not find a job anywhere and had to move back in with my parents. My uncle worked for the sanitation dept, so i asked him for the schedule of days the recycle pickups. This is what i did to make ends meet....i collected aluminum cans and old car batteries to make a few dollars.

Got a little tired of doing this and went back to college. Graduated but unfortunately at this time my parents (who helped me when I was down, not to mention all my life) started to experience financial issues. So i had to make a judgement call, it was either my student loans or my parents....

I would love to give my lender it's money back....but the terms are never reasonable. It is as if they profile me as a 22yr old college graduate....but I am not sure if they factor in that I have other obligations...(Father of 2 daughters elderly parents with financial issues).


Sorry for messing up this thread.....just a little pissed and stressed about this. Like a 400lb gorilla on my back.

With a default there are usually 2 lenders involved. You will have a trade line from the defaulting lender and then a tradeline from the guarantey agency. Both have their own SOL. Even the DOE has Direct Lending and ten the collection division. For FFELP loans, there would be (for example) Sallie Mae and then the guaraney agencey.

Can a person tell Direct Loans that they would rather Loan Rehab, than consolidate....and just take the chance that rates will not go up to high in teh 13 month time frame ?

Can you also make it part of the deal that the lender adjust the trade lines ?

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Can a person tell Direct Loans that they would rather Loan Rehab, than consolidate....and just take the chance that rates will not go up to high in teh 13 month time frame ?

Can you also make it part of the deal that the lender adjust the trade lines ?

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If you are in default, they cannot make you consolidate. However, I do believe that the wording the way the law is written, they must offer you a rehab program if you request it.

It is part of HEA that once you successfully complete the rehab and that the trade lines will be adjusted. It is the law!

DaddyO

Most people on this board understand your situation...you have the best intentions and then you are hit with something that changes your life.

I had no problem paying my student loans when I was working earning a good living. Then I lost my job and other things had to be paid before loans. I didn't waste money by eating out, vacations or big ticket items ( my car is 11 years old).

This is becoming more of a problem as loan amounts increase. I find it laughable how every talking financial head discusses student financial aid by saying "don't worry about your kids college education they can apply for student loans." Let's face it, financial aid today consists mostly of loans. Who gets grant or scholarship money? It's difficult to manage huge loan amounts with no income and no guaranteed income. You can't pay rent, a car payment, insurance and a $600-800 monthly student loan bill unless you are making a very good living and have no bumps in the road. Most grads are moving home and working temp jobs.

I understand...it's overwhelming.

It's crazy my friend. I emailed Suze Orman, Oprah and a few others...hehehe


still waiting for a reply. Only looking for a remedy to all this. If I didn't go to college....I would not have been able to eat and Lord knows where my parents would be without my income.

But then again. I have gone to college and still can't eat....so i am not sure if i am better off or not.


Good luck with your situation.

I feel for you guys big time. I just graduated this month with my masters and owe 65k in stafford loans. I just started the consolidation process w/ Edfinancial and get to lock in my loans at 2.85% minus a .6% deduction for consolidating while in my grace period and get another .25% deduction for auto debit of payments. After 3 yrs of on time payments, they will reduce the interest rate a full 1% Im so happy woo hoo! From what I have read, interest rates are expected to rise in July when they feds set em but they arent expected to rise up to more than 4%. If you guys can make extra payments to get out of rehab sooner and consolidate, Id try that if possible. Also, most people lenders/people say once you consilidate, repayment must begin 30 days after but Edfinancial is going to honor my grace period after consolidation. Good luck guys!

You can't get out of rehab any sooner than one year. They require 12 monthly on-time payments...you can get into trouble if you pay too soon each month. So....we are stuck until rehab has been accepted...then we can consolidate.

I wish we could get grandfathered in under lower rates due to the fact that while you are in rehab you are stuck for such a long period of time.

The only other option is to scratch rehab and consolidate now. But, given that when I graduated student loan rates were something like 8% (thank goodness I didn't consolidate then) 4% isn't too bad.

I'm not eligible for a 2.75% rate anyway b/c I graduated a few years ago.