Perkins Loan--Surprise!!

Discussion in 'Credit Talk' started by Serv, Jan 3, 2001.

  1. Serv

    Serv Guest


    I took out loan (FFEL)when I was in university and now I am still paying Guaranty Agency every month since 1991. Recently, I pulled credit report from all 3 CRAs and found 2 inquiries from the same collection agency (Conserv) which I didn't recall authorizing then I sent them letter asking them. They reply me that I owe them for Perkins Loan since I was in commnunity college. I thought the loan I am paying now to Guaranty Agency included this loan also. And Perkins Loan is about 10 years ago. No one contact me. No letter, No call from Collection Agency. Suddenly after I sent them letter about inqury they just surprise me that I owe them.

    I also called 1-800-4-FED-AID and they told me that it's default since 16-06-1991 with Commnunity College.

    What should I do now?
  2. roni

    roni Well-Known Member

    Hi, this happens alot. It also happened to me recently, if you look at my old post. You must contact the holder of the student loan. They will more than likely ask for payments. Perkins loans are still held by the community college instead of the guarantor. In other words when you start making payments you can make your checks out to the college. This being said you should also contact the community college, financial aid administrator at this time and set up a rehabilitation program. In 12 months the default will be removed from your credit report and records. That is what is truly important at this point. If it is not on your credit report now, chances are it will be put on your report as soon as you start making any payments. Now it is laying dormant. But the inquiries to your credit report wasn't for nothing. It was a little warning. Rehabiliation is your best option. Your loan officer should be able to supply you will all the info you need to rehabilitate your student loan. Good Luck.

  3. Serv

    Serv Guest

    Thank you so much--Roni---

    Roni, Thank you so so much for your quick reply.

    I just called the community college. My original loan is about $600.00 and I have to pay interest and end up with $1,300. Also, I didn't see any records about this default or collection on my 3 CRAs report yet. But as you said it might be there soon. As the original default date on 12-06-1991, I was wondering If I would like to pay in full now, Will those records be gone? or not show up on my 3 CRAs. As I read a lot of your posts, you mentioned that the record will drop off after 7 years from the original default date. Is it too late to pay in full now? Or I'd better rehabiliate my student loan. How can I deal with the collection agency which I just received the letter from them?

    Thanks again I really appreciate your help.

  4. roni

    roni Well-Known Member

    RE: Thank you so much--Roni---

    Student loans are not subject to the 7 year rule while unpaid. That is why it can appear now even though 7 years has past. There is a chance that if you pay the whole $1,300 that it may not reach your report. But this must be established with the community college. They can set up any kind of plan. If they dont tell you in writing that they will not report the delinquency, I would rehabilitate. You see even though it defaulted in 1991, you were delinquent on the account until the present time and they can report the delinquency from 1994-on. Be careful. That has been my experience with perkin loans. I know you are eager but paying any amount now may put it on your report. Once paid in full you have no leverage. However, you could alway dispute the account after paying. You have some decisions to make.

  5. Serv

    Serv Guest

    Thanks again.

    Thanks again Roni. I will call community college tomorrow and will asking in writing if they don't apply I will have to rehabilitate. And I will let you know tomorrow.

    Thanks again for your help.
  6. Serv

    Serv Guest



    I just called community college. They refuse to guarantee in writing. So I just decided to rehab for 12 months at $70.00 a month. And they will send me the agreement to sign and send back.

    Thanks Roni for all your help.
  7. Pizzaman

    Pizzaman Active Member

    Can you rehab such a small loa

    I also have a defaulted student loan (not perkins) which has been placed for collection. When I contacted the collection agency, the person I spoke with said that they can't put the loan in rehab if you owe less than 1,500 at the end of the 12 months. I'm not sure if this would apply to your perkins loan, but you may wish to check on it before wasting a year on payments if it won't help you.
  8. marci

    marci Well-Known Member

    RE: Can you rehab such a small

    I've never heard of that minimum cap before from either the Dept. of Education website, the Direct Loans consolidation package for defaulted loans, or the DOE Ombudsman office.

    Collection agencies lie all the time, as one told me I could not rehab my student loan and that they would "sub-brugate" it. Both statements were flat-out lies and the agency got into deep trouble when I call the guarantor about the conversation. I wonder if your collection agency was lying to you. Sometimes they don't want to rehab, so they can clear accounts faster.

    If they send him a rehab agreement, and he signs it and sends it back, then they *have* to rehab. If they mess with him, I'd call Pamela Moran with the Department of Education to follow up.

  9. Serv

    Serv Guest

    RE: Can you rehab such a small


    I got the letter from Collection Agency also but I called my school to find out about this loan first. I wasn't aware of this debt. The financial aid officer told me that I can rehab and will send out rehab agreement for me. They also told me that they will call collection agency to stop contacting me. I will only have to deal with my school not Collection Agency.
  10. Pizzaman

    Pizzaman Active Member

    RE: Can you rehab such a small

    The collection agency I am dealing with is apparently operating under contract with the DCS (government collection office).
    Unfortunately, my calls to the Dept. of Ed. for information about rehab keep getting passed down the line to these people, so the only info I have to go on is from them and from here. They are trying to convince me to 'consolidate' my loan, and have told me that would clear up the entry on my CR the same way. Some posts on here have said otherwise.

    Currently I am assuming that they are trying to set up repayment in the way that is most profitable for them, but I don't know where to go for unbiased info (except here, of course).
  11. mj

    mj Well-Known Member

    Roni- are you sure about the 7 year rule? I double checked the statute (FCRA, and as ammended 1996) and didn't see any kind of exemptions.

    My guess is that this isn't showing 'cause it's past the 7 year mark.

    NEVERTHELESS - Serv - you should, of course, pay it. Student loans can be easily turned into judgements and garnishments... and those public records hold for 7 years from the date of action, not date of first delinquency.

    Good luck!
  12. Ply

    Ply Guest

    I am not sure if I understand right. As I heard it counts since the original default date. And Serv has the original default on 12-06-1991. So I think if he pays off his loan in full ($1300) right now the record should be gone or not showing up on the credit report. But anyway, I can't find the documentation to confirm those so I am not sure.
  13. marci

    marci Well-Known Member

    RE: Can you rehab such a small


    Below is an excerpt of an e-mail I received from a Department of Education official who used to handle Perkin's loan issues. She was able to advise me even though my issues were Stafford loans. You should call or email Pamela Moran ( to discuss what the collection agency told you.

    And you should really be working with the guarantor agency or servicer (i.e USA Group, Sallie Mae, ASA, etc...) who owns the loan and NOT the collection agency. The collection agency could be lying to you through their teeth, but I doubt a government supported servicer would dare go against DOE statutes.

    My e-mai from a DOE official:

    "You are correct that all negative credit bureau entries must be removed upon the borrower's successful rehabilitation of his or her defaulted Federal Perkins Loan. Sec. 674.39(b)(3) of the Federal Perkins Loan Program regulations requires the institution that holds the loan to instruct ANY (emphasis added) credit bureau to which the default was reported to remove the default from the borrower's credit history within 30 days of receiving the borrower's last on-time consecutive, monthly payment.

    If you have contacted the school to no avail, then I suggest that you contact Pamela Moran, Chief of the Loans Branch in the Program Development Division here at the Department of Education at 202-708-8242(I am also
    copying her on this email) or the Student Loan Ombudsman at 1-877-557-2575 or to resolve this problem as I no longer work on the
    Perkins Loan Program."

    End e-mail.

    Hope this helps,

  14. marci

    marci Well-Known Member

    Pizzaman - one more thing...

    I rehabilitated a loan disbursement that had a balance of $600.00 and some change by the time I finished rehab. If it were true that you couldn't rehab for less than $1500.00, then I would not have been able to do what I did.

    For my situation in getting original servicers to delete info on my Stafford loans, I had to work with the Student Loan Ombudsman office. My specialist spoke with Pamela Moran - who affirmed the e-mail about the Perkins loans that I gave you above - and said it applied to Stafford loans (obviously, since Staffords were eligible for rehab long before Perkins were).

    Again, I'd call the servicer/guarantor/holder of the loan and tell them you want to rehabilitate. If they refer you to the collection agency, tell them the collection agency refuses to send a rehab agreement. But do all this ONLY after you've spoken with the Ombusdman office or Ms.Moran first. You want them to get scared of breaking DOE statutes. Let them know that you know your rights re rehab and that you've already got the DOE involved.
  15. Serv

    Serv Guest

    RE: Pizzaman - one more thing.

    Thank you Marci, It's very helpful for me also. I received the agreement about rehabilitate program today. I guess I will have to rehab instead of paying in full even it's just small amount. The financial aid administrator didn't guarantee that those records will be removed when paid in full even my original default date was 9 years ago.
  16. marci

    marci Well-Known Member

    RE: Pizzaman - one more thing.

    Sounds good, Serv! Just photocopy your signed rehab agreement before mailing it in and you should be okay!

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