Thanks to the 9 month rule, my loan will be completed on Aug 4th. Now I have to consider the next phase to this. Spoke with my contact person at AES and she said now I need to consider consolidating with William D Ford to attempt to keep my payments reasonable.

Looking for any suggestions or comments that will help me. I don't want to wait until the last minute before collecting all my thoughts. I did a search for William D Ford on the board here....but most of the post are old.

Thanks in advance !

Just make sure that the rehab is complete before consolidating. It's NOT complete just because you've made your 9th payment. You may need to make a payment or two into September or even October to make sure it's done, which doesn't occur until the loan is re-sold to a lender. It can get a little confusing there at the end, but if you consolidate too soon, all of your work in rehab will be for nothing (yeah, learned that one the hard way after the CA "misrepresented" things!!).

William D Ford consolidation is just Direct Loans consolidation through the DOE. Nothing too weird about it or anything. Who was your original lender?

Good luck -- and congrats with finishing up rehab!!

Thanks for the reply Ziggy


With respect to continuing the payments....


I have an automatic draft coming out of my savings.....so i am assuming this will stop....so are you saying to continue sending in the next payment or two ? I guess this is something i need to ask her as well.

Also, my contact at AES wants me to call 2wks after the last payment is made to take my information for the William D Ford people. She said this is something she can do online and send over....but i will need to work out the payment issue with this. They will look for at least the interest only payments....but if I have issues paying this....I can send in documents to prove that this will cause a hardship.

Living in NY sucks !

Thanks for the replies…


The letter I am to get indicating that my rehab has been completed……is suppose to go out Aug 4th. Trying to understand the necessary steps I need to follow to take this to the next level.

1. I am having an automatic draft out of my savings. Does AES stop this or how is this handled ?


2. When I receive the letter and send it back…are you suggesting that I can William D Ford, once the letter is received or after the letter from AES has been signed and I receive a reply stating so ?


3. Trying to understand the timing of my credit reports being updated to reflect the completing of the Rehab. Is it after I consolidate ?


4. When I first sign with William D Ford….is there something online that will ask if I want income contingent payments ?



Sorry for the many questions…..i got jerked setting up the loan rehab and I want to make sure I have all my thoughts together before the time comes.


Long story short…..AES kept saying over the phone that I can enroll in the loan rehab program…..but then kept sending me garnishment papers. This happened 2x, then I get a letter from my payroll area, that my wages were being garnished. I called AES about this…and they said I never replied to any of their mailings that were sent. I explained to the lady that I have been working with AES on the loan rehab before the garnishment papers were sent and I actually sent my loan rehab paper work in. They said they never received. So one payroll check was garnished. I called the Ombudsmen, and was able to get a 90 day hold on the garnishment until I can finish signing with the loan rehab program.

These people play dirty, so make sure you write everything down and do not sign anything until you are certain you know what it is you are asked to sign.

Thanks Lynn,

is there a grace period between the last rehab payment and the consolidation. I am t rying to understand what happens until the consolidation is signed. Am I still making payments to someone ?

No grace period per se. Your first payment to the new lender will be due
30-45 days after the rehab has funded. The fact that you will be in the process of consolidating doesnt waive the payments.

Question: 9 month rule? Each time I have talked to these folks about rehab I am told that it is a 12 month repayment plan and that it actually takes about 14 months before it is completely done so to keep making the payments until I would get a consolidation or notification of reinstatement.

Is it 9 months or is it 12 months? Funny thing is they offer all kind of great ideas, Hey Buddy you can rehab this for the 12 months get them out of default THEN you can consolidate them into one or two non-government loans and THEN guess what you can Bankrupt them cause they won't technically be guaranteed student loans anymore if you refinance and consolidate...

It went to nine months on 7/1 though I think that Perkins are still 12 months.

As for the rest - that is the biggest crock of lies I've ever heard. You can NEVER BK a student loan - they are re-guaranteed at the end of rehab and again when you consolidate.

Well, there are circumstances for BKing a SL but it's like acts of God to do it.

Miscalculated the payments...


My last Rehab pymt will be made on Friday, Aug 18th. I will continue making payments until the loans are consolidated. As I have stated.....they are suggesting that i consolidate with William D Ford. My person at AES says I can get income contingent payments, but will have to provide paperwork to list salary and expenses.

I received the letter yesterday stating that the rehab phase is over and I am to sign a form and send back....

but the form indicates a collection cost and i thought this were to fall off ?

Lastly, any comments or suggestion in consolidating or anything that will be of use to me is appreciated.

You need to do your homework. Federally insured loans are consolidated into federally insured consolidation loans. No BK...think you need to start reading!!

Please see above ^


Is there any reason why I should not consider consolidating with William D Ford ? Are there other options to consider ? Or, is this a good thing ?

Suppose to sign papers this week....wanted to sign today if I could.....just a little excited about the Rehab being over.......hehehe


Thanks !

Have your loans been picked up by a new lender? If not, you should not sign anything to consolidate.

Thanks for the reply and I am so confused and waiting for a call from AES now. I have nothing on my loans being picked up by a new lender….but the AES person suggested that I consolidate with William D Ford and this is why I asked above if this were the right thing to do.

I were told that the letter indicating that I have one more payment to make before successfully completing the Loan Rehab program will be sent on August 4th. I made the post above without opening the envelope and looking at the forms sent, assuming these were the correct forms.

After opening…I see these are the forms to set up the Loan Rehab program and nothing on the ending of. Initially, AES and I were back and forth to set this up….and I hope the same will not occur in ending this as well. They kept sending me forms to garnish my wages instead of setting up the Loan Rehab with income sensitive payments.

I am waiting for a return call from AES now. I will post what happens.

You have to sign a letter at the end of rehab agreeing to it - it's not officially rehab until you sign that letter and then a lender picks up the loans. DO NOT rehab at this point. Sign the letter, send it back to AES.

Do a search for ziggypop and read about her nightmare with consolidation after rehab before you even think about it.

Just called AES, but did not speak with my regular person. I asked why did I receive forms titled “Repayment Agreement Under the Loan Rehabilitation Program” when these forms were already filled out.

She explained that the forms are normally sent after the 7th payment is made to reiterate my agreeing to the terms on the Loan Rehab Program. I were told more than 2wks ago that I am due to make the 9th payment this week by my regular person, but this person today stated that this will only be my 8th payment.

My regular AES person told me that the initial payment would count as 1, but the person today has stated differently…and this week will mark payment # 8. So September is the last payment.

Not sure why I have to fill the forms out again….but I am still waiting for my regular person to return my call.

Lynn - what the guy stated was consolidate the student loans INTO NON-GOV, NON-FED loans IE a personal loan or credit line, etc. and then BK it, but essentially that wouldn't be possible anyway in most cases.

Thanks for the response as I know you know a lot about this area

I received two letters in the mail. One stating that my loans have been transferred to AES and it also states that my deferments and forebearance options have been reactivated.

A second discusses my repayment options.


Now I want to try and get income contingent payments thru William D Ford. It has been mentioned that I need to make sure the timing is correct. So after receiving the letters…..is the timing right for me to do this now ?

Keep in my….my 9th payment is not until Sept 18th


Thanks !

My best suggestion would be to call the CA....they should be able to tell you if you have been rehabbed as your loan would then be closed with them. Or call AES.

On it being the th or 9th payment issue....if you made 9 payments you qualified for rehab. They might have called payment one a downpayment but it still counts towards rehab.

If the loan has indeed been rehabbed, do your consolidation online with Direct Loans.

Lynn's right, of course. Your DP does count as a payment, but make sure that the CA understands that and has repackaged your loan. It sounds like they have (since it's back with AES), but, as you know, that's not something you want to risk. Make sure you ask the questions correctly (i.e., is my loan fully rehabilitated) as opposed to just "is my loan out of default." That's another one that got me. I didn't use the magic words -- they just told me that my "loan was out of default after my required 12 payments, so it would be sent to Southwest Student Services and no longer be with the CA." As we all know now, that's not necessarily rehab. Ah, the things we learn on CB AFTER the fact!!!

I've found that a lot of the CSRs at the CAs don't know what's going on, especially the ones who don't deal with borrowers all that often. One of mine (note that it was a CSR in the consolidation department!!!) tried to tell me when I called to question it that the reason the payment disclosure form for the consolidation (a form that they have to give you) was wrong was that the estimate form is impossible to complete accurately because the interest rate on consolidation loans changes every year, so they're always wrong!! When I tried to explain to him that consolidations are fixed rate loans, he said he'd never heard of that and that it wasn't true!!

Hope this helps!! Good luck -- and congrats on finishing rehab!! That must be such a relief!

DaddyO asked me to respond here on this issue, but I'm not sure I have enough info to do so accurately.

First off, consolidation and rehab are two separate issues. You can rehab your loans without consolidating.

My loans were all Direct loans. Direct with a capital "D," meaning they they were part of a program called "Direct Loans" straight from the Dept. of Ed. When I rehabbed my loans they were all returned to the original lender -- in this case my original lender was Dept. of Ed. This was/is a very specialized program and unless you have "Direct Loans" none of this would apply to you (though I believe it is still possible to consolidate with Direct Loans, but they wouldn't be your originator).

Once I finished rehab, my loans automatically returned to DOE. Then they sent me paperwork regarding my monthly payment, as they automatically put me into a regular payment program. The monthly payment was waaaaay to high for me to manage (ie, higher than my rent). So, I called them to be put into the income contingent plan.

This was still waaaaay to high for me (ie, twice what I'd been paying on my income based rehab payments). I had no idea what to do. I kept asking the CRs at DOE what I could do, were there options available to me? They kept saying "No. Income contingent for you is, at the lowest, just the interest. That's what we're offering you." I kept asking to be transferred to a manager/superior, because I did NOT go through 12 months of rehab, just to default again.

Finally, I got a supervisor who told me I could go into a "Partial repayment forbearance". It's like a forbearance (where you don't make any payments due to a financial hardship), but in this case you do make a partial payment -- and the payment is whatever you say you can pay. This forbearance lasts for 12 months, but you can renew it indefinitely. I make payments that are about half what my minimum/income contingent payment would be. The balance of the interest is amortized on an annual basis.

This means that I am paying less every year than the total interest that is added to my balance. My loans go up every year, not down. And even though I make payments, any years in forebearance do not count towards the 25 years of income contingent repayments. But they are reflected positively on my credit reports. This is a better position than where I was a year ago, when I had a negative TL. As far as credit TLs, I'm good. But I haven't yet begun repayments that will count towards that 25 year income contingent repayment. Not good. Better than bad credit though.

If you're finishing rehab and had Direct Loans, your loans will automaticallyrevert to DOE. But they won't automatically consolidate. These are two different things. My understanding is that if you have non-Direct loans, you can consolidate them with DOE when you rehab. Or you can consolidate elsewhere. Either way, if you weren't with DOE to statrt, when you rehab you need a new lender (your old lender may agree to buy them back without your involvement, so this may appear smoother for you).

Not all loans include an income contingent program. If have Direct Loans, you have this. I believe, that if you consolidate with Direct Loans (even if you started elsewhere) you also have this option. Some, but not all, other lenders offer this. If you have Direct Loans, you can do what I did, but only if you keep asking for it and ask to be transferred, until you get to a level where they're authorized to give it to you. (When I got to that level the first time, I said "Well, what do I need to do to get this?" and the guy I was speaking with said "Ask me." "Huh?" "You just got it." In other words, they will never offer it to you, but keep asking to be bumped up in manager levels until you get someone that can authorized it, if you need it.).

I don't recommend partial payment forbearance, because the balance of your loan just increases every year. But it it's the only way you can stay on the good side of payment, then do this before you wreck your credit.

I have also consolidated my loans. But I just did this in late June to lock in the 6.1% interest rate. The only reason I did it was to lock in the current rate (otherwise I would have gone up).

I was told by the CA that held my loans before rehab was complete (Van Ru, ahem) that I could NOT consolidate as long as I was in rehab. This was a LIE. (Shock! Awe!). So I didn't consolidate the year before when I could have locked in 4.something. It turns out you can consolidate while in rehab, and this is something to consider if you're in rehab around June next year. Because now I'm paying nearly 2% extra interest, and that 2% is more or less what keeps me in forbearance instead of regular payments.

I don't know anything about a "9 month rule."

PM me to give me a heads up if you want my (one man show) opinion on this issue.

Thanks for the replies everyone ! !


Lynn and Ziggypop,

My AES person suggested that I contact William D Ford to consolidate. Are you suggesting that I contact Direct Loans over William D Ford ? I will call AES to see if the downpayment was included in the 9 payments.


Citygirl,

i am trying to understand how this is reflected on your credit report. My employer does annual background checks, so i do not want anything adverse reflected on my CR. Is there any mention that your payments do not satisfy the minimum required (interest only) ? or does it show that something has been paid every month ?


Thanks to you all for your help.

William D Ford IS Direct Loans!

Hi Citygirl,

I have not checked myself, but my AES person said that William D ford (Direct Loans) offers payments based on your salary vs. expenses….ie, income contingent. Not sure if I am understanding your post….but are you saying this were not offered or that it was offered yet still to high ?

Also, how are the payments reflected on your CR ? does it state “partial payments” being made or what ?


Thanks in advance

Consolidation was done online; however, I will send in the Promissory Note via USPS rather than the electronic signature. Just want to make sure that I thoroughly read every little detail about this.


First payment outside of loan Rehab is due 10/15/06.


Is there anyway to get my 8.25% interest rate knocked down some ?

The government has assigned a formula for all companies to follow when figuring out an interest rate for fed consolidation. The formula is the weighted interest average rounded up 1/8th of a percent.

It's only borrower incentives that can reduce that interest rate. I believe you have hit the legislated cap for interest rates on fed consolidated loans.

oh lucky me....and thanks !


this is organized crime. You can refi everything under the sun, but a consolidated loan. They Gov wants you to go to college so that they can get more income taxes.....then they stick you with the interest rates on Student Loans.

Should have kept my azz right at UPS delivering boxes.

Are you doing the auto-debit? That's worth a 1/4% interest rate deduction with Direct. At least with SM (I don't know if Direct does the same thing), it doesn't reduce the payment, but it does mean that more goes to principal, so it's paid off faster. Also, SL interest is deductible, which is at least something -- it's also deductible "above the line", meaning that you don't have to itemize to take advantage of it.

Just some thoughts. Hope it helps!!

LOL, I understand that. Well you can always refinance it by getting a new private loan to pay off the fed loans. Why do that when the private lender isn't going to be as allowing to let you pause payments when you encounter financial difficulties.

Thanks Ziggy...

The tax write off is a good thing for sure....and the 1/4pt will help.



but like i said......they give us funds to go to school....then we pay more in taxes....then if we default on the loans.....because of having to care for an elderly family member (hmmmmm? sounds familiar...heheeh)....they stick it to you royally with penalty fees and screwed up credit that is only going to mean more money out your pocket because your existing creditors are now going to up your interest rates on your current revolving credit.

so now a $50k student loan balance is now $70k with penalty and accurred interest...and your payment has gone from $400/month ...up to $600/mopnth...and you couldn't afford the $400 so how on earth do they expect you to pay the $600.

I don't think anyone wants to default on loans......they are just not affordable. But if I didn't take the loans out...I couldn't go to college. If i didn't go to college....i would not have been able to help care for my parents...because a UPS salary in this area is not going to do it.


Now if I rob a bank to help pay this off....they say I am wrong. But they can rob me blind and it's all legal.


Sorry for the venting.....a fella feels trapped.


If I didn't have kidz and didn't have to care for my parents and didn't have to send my gurlz to private schools than this would be a none issue.


If anyone wants to go half on robbing a bank let me know. I can drive the car..I have EZpass to zip right thru the tolls........but I am not going inside...esp with a gun...hehehe

Very true.....definite advantages when staying with the FEds....


even though they stick it to you too....hehehe


Just drop the interest rate is all that i am asking. I may have to rely on this to send my daughters to school....so i can't screw up again. They got me trapped my friend.