I have two defaulted student loans. One with General Revenue Corp (CA), which was bought from California Student Aid Commission (Guarantor), which was bought from Citibank (OC). The other is with Windham Professsionals (CA), bought from EdFund (Guarantor), which was bought from Citibank (OC). I entered a rehab program with both CA's 10 months ago and have made 10 payments on one, and 20 payments (twice a month) on the other. I haven't missed any payments. Both CA's have said that even though I have made all payments required, there are no PRIVATE lenders to buy the loan due "the economy". However, the William D Ford Consolidation program has agreed to buy and consolidate these two together. However, CA's say that if William D Ford picks up the loans, technically I didn't complete the rehab program, and rather paid them off. So they REFUSE to delete negative payments, default status, etc.

What the heck? I met my end of the agreement and they cannot meet theirs? I found a lender. Why should they care and why can't they keep their rehab agreement?

Please comment and help.

You have a FFELP loan. You would have to have a FFELP lender pick up the loan in order to rehab. You cannot skip the step and consolidate and consider it a completed rehab. It is unfortunate but a lot of guarantors have lost their rehab lenders. I suspect somewhere down the line the DOE will step in and rehab the loans....however after the rehab is funded you would still have to consolidate.

Lynn i am in the same situation. I have a rehab with Wyndham Professional for EdFund (California) and a rehab with GRC for RIHEAA (Rhode Island). I JUST made the 1st payment this month. Do you think by the time i have made the 9th or 10th payment they will have rehab lenders? What do i do at that point if they dont? Is there someone at DOE that we can write to? I think they owe it to us to complete our rehab after said payments are tendered. Any advice?

Since Edfund is a FFELP lender, the DOE is not involved directly. However the DOE is well aware of the problem. There is no way of knowing when and how this will be resolved as you cannot force banks to pick up risky loans. Rehabs traditionally have a high rate of re-default.

What if there are no lenders available and you have a garnishment as well, would they at the very least stop the garnishment..

nope

I have made 10 payments and was told after making the 9th one that there were no lenders. I made the payments on top of having my wages garnished. After calling the US Department of Education and speaking with several different people, most of whom were very rude, I eventually got a person who said that because of the situation with the economy and the fact that I was never late, his supervisor agreed to stop the garnishment. I didn't believe it until I spoke with my employer and they said they received the fax. I was still in doubt until I actually saw the difference on my pay check. They can stop the garnisment if they choose to. It depends on who you speak with. The majority of the people I have spoken with don't even take the time to look at the account history and I have been given so much conflicting information between the US DOE and the collection agency (Van Ru).

Thanks Pisces good info to know. Did you get a name or number to the person you dealt with?

No I did not. I just called the regular 1-800-621-3115 number. I have written so many names down but they tell me there is no way to speak with the same person again. If you call, ask for a supervisor. I have spoken with several and some are not willing to listen to anything you have to say but I kept calling and eventually, they stopped it. It was funny because most people did not even look at my payments or notice that I was making consecutive payments. They would ask if I wanted to pay in full or tell me that I must have missed a payment (the reason why a lender had not paid it off) until I got someone who explained that there were no lenders.

What a pain that they have no clue but at the same time continue to ruin people that are trying to do the right thing..

Nobody is trying to "ruin" anyone. It is all due to the economy and a glitch in the law.

How about they try fixing the "glitch". Maybe they can start by being honest and telling folks there isn't any lenders available, instead of making them jump through hoops. These crooks could make a loan shark blush.

The Higher Education Act is a congressional act and any changes to the rehab program is going to take time. You also might want to read the wording from the Department of Education site...similar wording for Direct Loans.

To rehabilitate a FFEL, you must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period to the Department. Payments secured from you on an involuntary basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have made the required payments, your loan(s) [i]may be purchased by an eligible lending institution.[/i]

The word MAY takes away from their liability that they HAVE to rehab.

Right now with the economy being what it is, the ffelp guarantors are doing what they can to secure lenders. (I still have friends in the industry.) However, cusomter service reps and collectors are not filled in on a daily basis as to what is occuring.....they are left hanging as much as you are.

I beg to differ about them not trying to ruin people. This whole thing is just a big racket. When the government decided that there is no bankruptcy protection and that they can take anything they want without a court order for unpaid student loans, defaulted student loans became more lucrative for companies like Sallie Mae. This is why they lobbied for this. There are several claims where people were never contacted or their bills were mailed to an old address.

I understand that it is our responsibility to keep up with this when we take the loan out but when it comes to student loans, we have no rights other than not taking one out. This has definitely been a learning experience for me. I was 17 when I went to school and had no idea of what I was doing or how it was being paid for. Of course Sallie Mae is now one of the lenders that is no longer available. They have made a lot of money off of defaulted student loans of course they have nothing to give back now. The greed has affected people in so many ways.

I am happy that the DOE has stopped garnishing my wages and as long as I can help it, I will never miss a payment. I know that I'm responsible for this but that still doesn't make it right for them to do nothing for people that have done what they were supposed to to rehab these loans. While they take their time coming up with a resolution, more people will lose their homes. The only way I was able to make payments on top of my wage garnishment was to go into debt. On top of that, I cannot buy a house until the default status is removed from my student loan accounts.

Don't get me wrong Lynn. I know they are not "trying" to ruin people but at the same time, if you have been making payments voluntarily and on top of that getting garnished as well, but at the end of your 9 or 10 months if there are no lenders available then some provisions should be made to at the very least stop the garnishments or at a minimum maybe cut the garnishments in half. We are all struggling, we are all trying to get ahead, but if I hold up the end on the bargain then should be willing to help you out someway.

It is just the way the law is written..unfortunately. But also from the guarantors stand point, you agreed to pay your loan in full on demand if you defaulted. You didnt hold up that end of the bargain. However, this has never been an issue before, so they have never had to deal with this issue before. Personally with ffelp loans, if you have been in default close to the 7 year mark, I would be asking them to lift the garnishment so you can consolidate. For someone in default 5 or more years, there is little benefit in rehab.

I just found out about this today when we phoned the credit agency that is handling my husband's defaulted student loans. We have been paying since last July, so we have made 9 payments which was the agreement only to be told that the loans will be kept in default until a lender is found (who knows how long that will be). Now I don't know if we should consolidate the loan to get it out of default, but then we would have to live with the negative credit rating which we can't have with wanting to get a house in the near future. But who knows how long it will take to find a lender and if they even will. Meanwhile we are struck in limbo in default with all the negative consequences even though we held up our end of the bargin. I know people will say that my husband caused this problem by going into default, and yes he was wrong, but it was 10 years ago and he was young and overwhelmed with debt that he couldn't pay and thought if he didn't pay it would go away. I don't think a mistake he made in his early 20s should ruin the rest of our family's life.