Quick student loan rehab ?

No, just don't assume that 12 payments mean that you are in a rehabilitation program. You are not in a rehabilitation program until you sign a letter saying that you are. You are supposed to sign a "rehabilitation agreement", which is a good faith agreement to pay ____ a month for 12 payments so that the loan will be eligible for rehabilitation. The agreement will specify that the payments are for rehabilitation, and at the end of 12 months, your loan will be considered for rehabilitation. This rehab agreement should come from the collection agency and have the amount of the monthly payments in it. It should also have a place for you to sign the agreement and then return the original to the collection agency (CC/RR of course). Call the servicer each month to make sure that your payments are being applied on time every time.

Just make sure that you get a letter stating that you plan to make a good faith rehabilitation effort to have your loan considered for rehabilitation with the loan coming out of default AND deleted from your credit reports.

After the 12 months, the CA will submit your loan to your servicer/guarantor who will then sell your loan (reinstate out of default) to a new servicer. At this point - you will sign a "rehabilitation contract", itemizing the original principle, interest and collection costs, the new capitalized principle and disbursement dates for each loan.


If the CA doesn't give you a rehabilitation agreement letter - call your servicer and demand that they send you one. If they refuse, then both the CA and servicer/guarantor are in violation of the HEA and you can yell at P. Moran or the Ombudsman's office.

And then e-mail "Mozilla".

 

I was told by PHEAA that there is no such "rehab agreement letter" or anything as such. I just made my 8th consecutive payment of $250 this AM and questioned them on this.

They said that the rehab program isn't something they offer you per se. It's the law - so as long as you can prove you've made 12 consecutive payments, you can rehab the loan after the 12th payment.

Tom

 

hmmm...


Interesting. I received two such letters from two different collection agencies who were collecting for American Student Assistance.


The collection agencies were Delta Management Association and Allied Interstate Educational Division.

Both letters were somewhat differently worded, but both stated that this was an initial agreement for me to make "good faith" payments toward rehabilitation.


You're right that it is the law, though. I wonder what Pamela Moran would say.

 

Maybe some places just offer it as a courtesy?

Since it is the law, I personally really don't see a need for a letter. As far as I can tell, the rehab option is not really a "program" you enter into. It's just the term given to a loan that has been paid on time for 12 consecutive months.

 

Unless there has been some new update to the law, all that is required to rehab is to make the 12 regular on time payments. I do believe the payments must result in a 10 year payoff of the debt, however. I mean, a 10 year plan, not longer.

 

Really?


Direct Loans allowed me to do the income contingent plan (25+ years) on all of my rehabilitated student loans. And so did Sallie Mae (who intially reinstated the loans), before I consolidated with Direct Loans.

 

As I understand it, whether or not they choose to allow a borrower to enter into a repayment plan which exceeds 10 years is at their discretion for purposes of loan rehabilitation (and probably requires a written agreement). However, a repayment plan of 10 years or less is automatic (and does not require a written agreement). Have all the derogatory lates and past due status notations disappeared on your consumer report? I ask this because any remaining derogatories could be explained because of this. Although, if you have a written agreement specifying rehab that should protect you.

 

I did fill out a written request to do the income contigent (25+) plan with Direct Loans, but I think everyone has to do this, regardless of default or not. It was just a general repayments options form.

As far as the rehab, all tradelines from ASA and USA Group disappeared after rehab on all three reports within 2 months of rehabilitation. Some disappeared on their own, others I disputed (I was in a hurry) and ASA returned with instructions to delete. So my credit report is completely clean wrt student loans.

I do have letters from ASA stating that my defaulted loans were rehabilitated, paid in full, and "reinstated" and that they would delete all negative info related to the loans.

 

Hey Marci--are these forms available online by any chance? My fiance is looking into rehab vs. consolidation for student loans right now. TIA.

 

Are you asking for forms detailing the difference between rehabilitation and consolidation? I suggest going to http://www.ed.gov/directloan/ and asking them to send you a consolidation application. The packet they will send you will discuss the pros and cons of rehab v. consolidation. You can also get that information from the Higher Education Act (do a search at www.ed.gov) and from http://www.carreonandassociates.com/sl.htm (and creditnet, as well).

The form I was discussing with Mozilla is not for rehabilitation. It is for loans in good standing and deals with how long one wants to repay a loan.

 

Thanks. Sorry for the confusion, I'm still getting the hang of student loan terminology. I will search the sites you suggested.

 

I'm confused. I thought we were talking about whether a form was required to enter into rehab for a 10+ year repayment period. Whatever, I think we've beat that subject up pretty good.

In any case, I take it that the only remaining student loan problems that remain for you is the NSLDS stuff. Is that it? But I though you still had the zero balance with I5 status showing on your Equifax report. Is that no longer the case?

 

LOL! Now I'm confused. The only form I ever filled out to *enter* a rehab plan was a good faith agreement mailed to me from the collection agencies that I would pay for 12 months and then have my loans considered for reinstation. There was no reference to paying for 10 years in these letters. At any rate, why would anybody *want* to rehab a loan for up to 10 years?

Ok, the beaten horse is sufficiently dead now.


Yes, the only remaining problem for me is the NSLDS stuff. And I finally received a letter (the one that was lost in space somewhere) from ASA specifically detailing the problems with two disbursements. The letter is not as detailed as I would like it to be, but it is better than earlier ones. They said a problem with their database should be fixed at the beginning of this year. I'm going to follow up with a detailed letter reiterating the specific errors, but I *think* I'm okay, as I have enough letters stating that my loans are paid in full and out of default.



I'm also not the one with the zero balance I5 tradeline on a credit report; I think that was Erica. My credit reports were always fine.

 

YES!!! That is me. I also have other MAJOR issues in another thread...Student Loan Oddity. Any suggestions are appreciated.

 

When I first spoke to them about rehab, they strongly pushed for the $250 per month payment. They said that was their estimate of what I could afford based on my employment and line of work I am in and it was the amount they feel they could get if they were to garnish my wages so I said OK.

It does have to be an amount that is realistic - I do remember reading that clause somewhere.

As for suddenly changing the amount I am paying without their approval - I wouldn't suggest it because 2 months ago, they drafted $450 instead of $250 out of my checking account "by accident" (I still have my doubts). When I called, they said that they would credit $200 of it to the next month's payment so I would only have to send $50. Well, when I called last month to make my payment over phone, the girl proceeds to tell me I have to start all over because I only sent $50 that month!

I exploded! Before I had a stroke, she apologized and said she didn't read the notes on the account and that I didin't have to start over.

Based on that conversation, I would venture to say that changing in midstream without approval would be a no-no.

Tom

 

What amount is realistic? If I can afford only $50.00 isn't that realistic enough? The reality is that I have no more than that to give

 

American Student Assistance told me that I *had* to pay 1.5% of the principle per month for rehab as that was the law. Now what law they were referring to, I don't know but they were adamant about it.

I did get to pay less than 1.5% on one loan - but I had to fill out a financial hardship form to get approved for less, and yes- even then I had to keep reminding them I had permission to pay less.

What a headache...