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Stuent Loan Paid in Full During Rehab - Nelnet Continues to Report 120+ Days Late as Current Status


papageorgio
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The last post in this topic was posted 3229 days ago. 

 

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In 2009 I defaulted on a Federal student loan with Nelnet. The loan had a balance of approx $950 at the time of default. Nelnet transferred the loan to ECMC, and in 2010 I entered into a rehab agreement with ECMC. Under the rehabilitation payment terms, the loan was paid in full on the final rehabilitation payment.
Fast forward to 2014 and my credit repair journey...
I discovered that despite stating all negative remarks would be removed, ECMC continued to report this account as a collection on my reports. I disputed; they verified. I filed a BBB complaint; they removed the account and stated that the loan had been paid in full during rehabilitation.
Nelnet continues to report the account with a current status of 120+ days past due with comments stating, "Student loan assigned to government." I disputed; Nelnet verified. I filed a BBB complaint and included the response from ECMC. Nelnet refuses to remove the current reporting status of 120+ days past due, and the comments. They state that because the loan was paid in full to them by ECMC, and never repurchased by a lender, they do not considered it rehabilitated.
So, I abided by the terms of the rehabilitation, and am being punished for it. Any advice on where to go next?
NELNET's Response:
Our records reflect that your loan #* on account **** did not receive the necessary payments, went past due, and defaulted. This loan was paid to Nelnet by it's guarantor, ECMC.
Our records reflect that the loan owned by ECMC was paid in full to ECMC. Payment in full to the guarantor does not rehabilitate a loan. Since the loan was not rehabilitated, we are unable to retract the default or past due reporting for this loan.
ECMC's response:
ECMC has reviewed your concerns with the collection agency which was assigned to handle your account. Based on that review it was determined you did establish a repayment plan to rehabilitate your loan. Due to the low balance of the loan, it was paid in full before a rehabilitation lender could repurchase any balance.
Because your rehabilitation payments were made as per your agreement, ECMC has submitted requests to remove its tradeline from your credit report. ECMC has no control over and is not responsible for how long it takes the consumer reporting agencies to remove the tradeline.

 

 

 

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That is the correct position by Nelnet and any other federal loan servicers. Rehabilitation only works in removing the default status from the guarantor, aka ECMC. The prior loan holder (or original creditor) still has the legal rights to report the derogatory remarks for 7.5 years from the date of default. There is nothing that you can do at this point, unless, you want to continue to dispute or start writing some good-will letters.

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That's disappointing. My understanding is that the late payment history would remain, but it would clear the 120+ days past due status, which is more important to me than the lates. On the positive side, the account dropped off my EQ report this morning. Will wait and see if the others follow suit. Worst case, the account is due to fall off in 10 months.

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What most people do not understand is that the act of rehabilitation occurs when a lender pays off the guarantor. Making the payments is not a rehab and technically there is no such thing a as a rehab program. It is a qualifying event when you make the 9 payments and a loan balance is paid. If you paid in full during 9 months, rehab could not occur thus you are not eligible for any of the benefits.

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