Student loan rehab ??

Discussion in 'Credit Talk' started by Future1966, Jun 3, 2002.

  1. Future1966

    Future1966 Well-Known Member

    I had posted a few days ago with a question about GLHEC/OSI and validation because I want to get all my ducks in a row before requesting rehab. I believe the negative remarks on my CRs are inaccurate, and I don't want to waste an entire year of rehabbing before getting them accurate...I want them correct now.

    Anyhooo...my question about rehabilitation is this...and it's for those of you who can share your experience with it: Is it better to rehab with the CA/guaranty agency or with the original lender (in this case Sallie Mae)?

    I had read somewhere that it is better to request that the original lender take back your loan, but what is the best way to convince them to take back your loan? If Sallie Mae took back my loan, then per their website calculator, my rehab payment amount would be just about equal to the amount being currently garnished from my wages.

    Who do I contact at Sallie Mae (if that is the way to go)? Or am I barkin' up the wrong tree?

    Thanks so much!
     
  2. tmitchell

    tmitchell Well-Known Member

    I think you have to rehab with whoever is currently holding it. I just finished rehabbing mine and should see my paperwork in the next day or so.

    Those who held your loan prior to the current servicer ARE NOT required to delete anything - only the current servicer is required under the HEA to delete the negatives.
     
  3. nimbus

    nimbus Active Member

    If you can convince your original lender to rehab the loan, if they even still posses it then that is definitely the way to go. Give them a reason to let you, i.e. family death, depression or illness etc... At least try. Sallie Mae/USA Loans has always worked with me. I am one of the fortunate people who was able to get the original lender to list on my reports as Paid Never Late but I also ended up paying 40% more for that debt after collection fees etc... If it has already gone to collection then most likely it is not currently owned by the original creditor.
     
  4. Future1966

    Future1966 Well-Known Member

    It is currently owned by GLHEC and the collection is serviced by OSI Educational Services (boy, OSI is everywhere, huh).

    I have done a search on Marci and "student loan rehab," and from what I read on her post, ALL negative information is to be removed (according to the DOE), regardless of who it is rehabbed with.

    I would like to know if Sallie Mae would be open to repurchasing my loan prior to rehabbing...in which case my rehab payments would be approx. $300/mo which is what I'm already being garnished.

    If I rehab the loan with Great Lakes (GLHEC), then they want my rehab payments to be approx $370/mo. That $70 may not seem like a big deal to GLHEC/OSI, but it is to my family. It really makes the "carrot-on-the-stick" that the HEA holds out to be unappetizing when you have to tighten your belt THAT much for an entire year.

    Any other experiences out there? This is great, folks! This is why I come to Creditnet...because there is so much good information out there.
     
  5. tmitchell

    tmitchell Well-Known Member

    It is Marci's interpretation that old servicers must delete but they don't have to. I, too, have talked to the Dept of Ed. They told me that the HEA only applies to the current holder of the loan. That said, they did tell me that in the spirit of the HEA, the original holder will sometimes delete as well but there is nothing in the HEA that requires them to do so.
     
  6. Future1966

    Future1966 Well-Known Member

    Thanks, tmitchell! :)

    I just found a HEFTY document that I'm going to search through tomorrow on FFEL (the type of loan I have).

    http://ifap.ed.gov/regcomps/attachments/682.pdf

    Just thought I'd post it in case anyone wants to look at it.

    Going home now...work is over! :)

    Thanks again... Still looking for any other experiences out there.
     
  7. nimbus

    nimbus Active Member

    True they are not obligated technically but if you are persuasive sometimes the ombudsman can talk them into it. It's all about talking Sallie Mae into taking the original loan back. Also if you rehab through the collection agency prepare to pay 25% of your loan in collection fees in addition to your loan. How much in loans do you have? I have $40,000 and I only pay 229 of course I am on the 80 year plan.
     
  8. marci

    marci Well-Known Member

    I beg your pardon.

    It is *not* "Marci's interpretation" anything. That is what I was told by Pam Moran on the phone back in January 2001. She told me that the language concerning deletion from original loan holders was unclear, that the spirit of the Rehab Act certainly applied to all holders of the loan, and that she appreciated people like me bringing this problem to light, since the DOE always looked for ways to make the language of the HEA communicate what it's supposed to do.


    She contacted my Ombudsman specialist (he told me that she did), and he, in turn, contacted the original holder. A week later, the specialist called me back saying that the original lender agreed to delete.
     
  9. Future1966

    Future1966 Well-Known Member

    I owe approx. $29K ($24K without all the interest& fees the CA is charging). The amount garnished barely covers the interest, unfortunately, so the principal is VERY slow in coming down.

    Here's a little twist that someone might find interesting.

    My husband still owed about $1,000 from an old student loan. For the past year or so, he has been paying about $10 biweekly on the amount directly to the CA (Nationwide Credit) even though they wanted about $100/mo. He just sent them what he could.

    He didn't ask for rehab. He didn't know he could at the time he started doing this; he just wanted them to quit calling and sending letters.

    After 6 mos of doing this, they sent him a letter offering rehab. He still didn't respond...just kept sending the payments. I didn't know anything about this until later, since he handles his own past bills separately from our current joint bills.

    Well, a couple of months ago (after about a year of sending in biweekly payments), he asked me to check the NSLDS to check how his payments have been affecting his balance. Lo and behold, the loan has gone back to the DOE...automatically...no notice.

    He hasn't been able to contact DOE yet, but it looks as though he rehabbed his loan without a formal request to do so.

    Any thoughts?
     
  10. Future1966

    Future1966 Well-Known Member

    Thanks, Marci. I really appreciate your input, because I know that you were dealing with this situation for a while. I wonder if they'll look into rewriting that section to make it more clear, so that people don't have to deal with guaranty agencies forming their own interpretations.

    Who was your original servicer again?
     
  11. Future1966

    Future1966 Well-Known Member

    Oh, one more question....

    Must the CAs for student loans adhere to the FDCPA also?

    This is important because I have already requested complete accounting for this debt and have received no response yet. They have until the end of this month for the 30 days to be up.
     
  12. suedan217

    suedan217 Well-Known Member

    I have rehabbed a loan before. I finished last year at about this time. The loan was taken out in TN, which defaulted. I called them and they said that I could rehab it. Basically, paying on time for one year, after that point, they would take off the charge-off description and put transferred or sold and paid as agreed. Then they would take out a new loan and as long as I keep paying this one, they would keep everything good and well. Beside, the point, I noticed on my crdt rpt that it is not being reported correctly.(the old loan). I called them today and they said that they would have it corrected within thirty days.
     
  13. marci

    marci Well-Known Member

    My original servicer was ELSI. The loans then went to USA Group (now with Sallie Mae). The loans were rehabbed with ASA. ELSI was not an issue getting off my reports b/c they were out of business. It was USA Group with whom I had the problems, but they agreed to delete, as I discuss above.


    As far as the FDCPA and student loan CA's, yes I do believe they have to comply with it. The expert on this issue is called "mozilla" on this board, as he took a guarantor to federal court and won (a rare feat). You may want to look up his posts or drop him an e-mail.
     
  14. tmitchell

    tmitchell Well-Known Member

    Excuse me. Why do people get so offended so easily around here anymore? I remembered you stating that original holders, "in the spirit of the HEA" should delete the entries.

    What IS your interpretation of the HEA?
     
  15. marci

    marci Well-Known Member


    No. I stated that Pam Moran told me that "original holders, 'in the spirit of the HEA' should delete the entries". I shared information with posters on this board based on a conversation I had with her concerning my specific issues. Furthermore, I have graciously shared her e-mail addy and phone number with some on this board, so that they'd have the opportunity to follow-up with her on this issue.

    You make it sound as if I came up with this idea out of thin air, and that is why I took offense.


    The interpretation Pam Moran gave me.

    The point of the Rehabilitation Act was to give defaulted student loan holders an incentive to pay the government back. The way to do that was to give the students a second credit chance (i.e. deleted tradelines) in exchange for the gov. getting it's money back plus some (i.e. capitalized collection/interest costs). It's a sweet deal for both parties; if credit matters to the student deeply enough that he/she is willing to pay the gov. a little more.

    It follows that if the incentive for repayment is a second credit chance, that the second credit chance should be complete and thorough. It does no good to have a recent collection deleted but have 5 more remaining just because they came from an earlier servicer.

    So, I agree with Pam Moran re the "spirit" of the Act. It's just poorly written and the guarantors are taking advantage of that fact.
     

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