My husband has an outstanding student loan that has been in default for many many years. Basically when he was young he didn't know any better and didn't pay the loan because he couldn't afford it and thought if he forgot about it it would go away. The loan was only paid through his tax return and wage garnishments during this time until he lost his job last March. Last July his mom gave me a letter he got back in March when the government could no longer garnish his wages since he wasn't working at his old place of employment. We found out that the loan amount which was originally 36 thousand had ballooned to 62 thousand (12 thousand each for interest and collection fees). When I found the letter we contacted the collection agency to try and take care of the loan and were told that we could rehab the loan for $375 a month (they wouldn't lowering the payment less then this even though it was difficult for us to afford) for 9 months. After 9 payments the loan would be taken out of default, his credit would be wiped clean, and the collection fees (12 thousand dollars) would be removed, so of course we agreed to this. Fast forward to today, we just made the 9th payment last month and phoned the collection agency to find out about having it taken out of default only to be told that there are no lenders and until there are the loan will remain in default, which means no benefits of rehabilation. I also asked the guy if we could have the loan freezed or payment reduced since I am losing my job next month and with my husband's salary we can only afford food, while my unemployment will only cover rent, which leaves 0 dollars to pay the loan. I was told no we had to pay the 375 or go back to the start of defaultment and have wages garnished. He said that 375 was the lowest monthly payment.
Now I don't know if we should just consolidate the loans to have them taken out of defaultment so we can put a freeze on the loan or if we should just wait it out in rehab that may or may not get out of. We also want to buy a house in the near future once I start working again which is why we liked the rehab to have the clean credit. My credit is good, but I would like my husband to not have to live with this bad credit from over a decade ago. We held up our end of the agreement so I think the least they can do is hold up their's and take it out of default and wipe off his credit report. Also I don't know what type of loans my husband has since they were so long ago. The money we pay goes to the department of education and he has 10 loans each of a few thousand that total $60 thousand now.