Greetings all!

I've been looking around on the forums and don't see the answer I need. My question is: do we have any room to negotiate a lower payment than the $600 a month payment they are saying we have to pay?? Is this a typical amount for a repayment plan to avoid garnishment on payroll?? BTW, the amount is 15,000 but we can pay off for 10,000 at any time, which would have been the original amount of the loans. So, after 12 months of paying, I'll nearly have this paid! Is this an ok deal we're getting??

Thanks in advance!

Sam -

$600 is reasonable if you can reasonably afford that each month without causing you undue financial hardship. However, there is room for negotiation there. I had more than double your amt of student loans when I rehabbed, and I know my rehab pmts were less than $100 (I was unemployed at the time.)

When you are in default, a claim is filed with the guarantor. Technically and legally, your balance is due in full. It is included in the loan disclosure statement that is signed.

<<Acceleration and Default
At the option of the lender, the entire unpaid balance of the
applicable loan(s) made under this MPN will become
immediately due and payable, (this is called “acceleration”),
upon the occurrence of any one of the following events:
(i) I fail to enroll as at least a half-time student at the school
that certified my loan eligibility, (ii) I fail to use the proceeds
of the loan solely for educational expenses, (iii) I make a
false representation(s) that results in my receiving a loan
for which I am not eligible, or (iv) I default on the loan.
The following events shall constitute a default on my loan:
(i) I fail to pay the entire unpaid balance of the applicable
loans after the lender has exercised its option under items
(i), (ii), or (iii) in the preceding paragraph; (ii) I fail to make
installment payments when due, provided my failure has
persisted for at least 270 days for payments due monthly or
330 days for payments due less frequently than monthly; or
(iii) I fail to comply with other terms of the loans, and the
lender or guarantor reasonably concludes I no longer intend
to honor my repayment obligation. If I default, the guarantor
may purchase my loans and capitalize all then-outstanding
interest into a new principal balance, and collection fees will
become immediately due and payable.>>

When these accounts go to collections, it is required that the agencies dunn for balance in full on first contact. The next option is to get the largest payments over the shortest period of time. Final options are rehabbing and consolidation. The guarantors want want these off their books as quickly as possible. Your payment was probaly set based on a financial statement.

Thanks for the replies

After reading info here on the boards, I don't feel the situation is unfair. Sometimes, it's so hard to know for sure. I look forward to making that first payment, it will mean we're finally on the way!

Thanks again to everyone here for the helpful info!

Just wondering (and I think you'll still qualify, so this may not be an issue for you) -- are you looking to rehab your loan and how much of that $15,000 is principal and how much is fees/penalties? If you are looking to rehab your loan, you need to have at least $1,500 (or maybe it's $1,000; I can't remember!) at the time of rehab in order to qualify. And, after you've made your payments to qualify for rehab, they usually forgive most/all of the penalties and fees. So, if you think that you're close, that could be an issue if paying $600 per month for 12-13 months will leave you with less than $1500 (or $1000 -- whichever one it is). I think the general guideline is that your rehab payment be about 1% - 1.5% of your total amount due (if you can't tell, my powers of recall are a little limited right now!!). In your case, that would either be $150 or $225 per month -- way less than the $600 they're looking for.

Good luck!!

Ziggypop, I am just looking at the papers that were faxed to us today. This says it is a repayment agreement, to be reevaluated in 6 months based on financial info.

Perhaps I don't understand what it means to rehab?? If I can get a lower payment, I'd love to do that, of course. What am I missing??

Wanted to add: the original amount of the loans was approx. 10 thousand and the 15 thous. I mentioned above includes all the fees and interest accrued thus far.

Sam --

Rehab is a program available for government-backed loans that allows you to make 12 on-time, voluntary, reasonable payments on your loans, after which your loan will be repurchased by the government and all default information will be removed from your credit reports (the DOE has urged them to remove all negative information, but they are only legally required to remove the default notation). After that, your loan returns to a standard repayment plan (generally paid over 10 years) or it can be consolidated, which could decrease your payments by increasing the number of years you have to pay it back and/or your interest rate. Like I said, after the 12 payments (sometimes it actually takes 13 by the time it gets sold), you have to have either $1,000 or $1,500 left in order to rehab, which is why you'd want to make sure your payments aren't going to put you under that amount. One of the requirements with rehab is that the payments be reasonable -- both to the CA/lender and you. Like was discussed earlier, the general guideline is that the payments be about 1 to 1.5% of the total loan amount due, but, as you can see from Cheech's post above, if that may not be "reasonable" for you. Just make sure it's something that won't put you under the minimum amount left over to be eligible when you've completed the payments and that it's an amount you can really do for 12-13 months -- if you miss even one payment, you have to start the 12 months all over again. You may want to talk to whoever you're dealing with on the loan about it. It really is a great program. If you do a search on "rehab" in this forum, you'll find a ton of information on it.

Hope this helps!! Good luck!!