Here is my proposed rehab letter for my Perkins loan. I'm trying to deal directly with the lender (a university) rather than the CA. Comments anyone? Just wanted to run it by the board before I sent it out... Thx all ___________________ "The Higher Education Act requires â??if the borrower of a loan made under this part who has defaulted on the loan makes 12 ontime, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated (Ch 28 Subchapter IV Part D Sec 1087dd (h) (1) (A).) Under the rights provided to me by the Higher Education Act, I would like to request rehabilitation of my loan held by the (institution name) in order remove all references of default from my credit rating and bring my account back into a current repayment schedule. My disposable income sources are have become limited as I have been laid off back in August, however, I have examined my budget carefully, and have determined I would be able to make a payment of $30.00 per month towards rehabilitation of this debt Again to confirm, I am offering a payment per month in the amount of $30.00 for 12 ontime payments to rehabilitate my loan. I look forward to bringing my obligation with your institution back into a positive repayment schedule. Please confirm the acceptance of this letter in writing. Sincerely, ___________________
It certainly doesn't hurt to attempt that kind of negotiation, but I'm not too optimistic. Keep in mind that if the loan has indeed defaulted, then it is now owned by the guarantor (student loan-talk for collection agency, lol). The Department of Education regards guarantors with a level of esteem that other collection agencies just don't enjoy in real life. In any event, you'll probably need to contact the guarantor, let them know that you want to rehab the loan, and accept their payment schedule (including payment amount). Once you have successfully met the terms of the rehabilitation, the loan will actually revert back to the original loan provider. At that point, you'll need to pay the loan according to the terms of the original agreement. Doc
Rockbottom, When I rehabilitated my NDSL through the university, they allowed me to choose the monthly payment. They had a judgement against me, which was listed on my credit reports. I called them out of the blue. They were just starting to rehab student loans. The person I spoke with was very nice. She allowed me to decide how much I can afford every month. I choose 50 bucks on a 1500 balance and they were agreeable. They sent me a letter outlining the rehab act stating I had to pay 50 bucks per month for 12 consecutive months. The payment had to be received on or by the 5th of every month. After completion, true to their word the notified the bureaus. Trans Union picked up the judgement from a source, the university didn't report to them. When I sent them copies of the letter they refused to remove the judgement tradeline. As a matter of fact they duplicated it. It was the springboard for my suit against them. I was able to get all (legit) negs removed (HORRAY!!!). So bottom line, it doesn't hurt. Let them tell you what they want. If it isn't acceptable they will let you know. Good luck
In my letter from the CA, they specifically list the creditor as the institution. Now with a few other loans, they were lent to me originally Sallie Mae and USA Funds but were sold a while later to the guarantor as you suggested, or the Department of Education. This is also supported by when I called the number to find out who held my defaulted loans, and 1 was with the university a 3 with the DOE. I just feel the HEA wording specifically requires the lender or institution to do a rehab, not the CA. Maybe they will press me to go through the CA. I'll cross that bridge when I come to it. I just figure if I owe a debt, I want to deal with who holds your debt. I'm prepared to go through the Omsbudsman if necessary to avoid the CAs. Thanks for the comments!
rockbottom, You have to pay the CA (i.e. check/money order made out to the CA) but you can communicate with the guarantor. The "good faith" rehab agreement will come from the CA. You sign it, and mail it C/RR back to the CA (and a copy to your account manager at the guarantor agency). Then once the rehab is up, you will receive a rehab "contract" from the guarantor - not the CA. Sign and mail C/RR back to the guarantor.
I agree with marci -- you'll have to pay the CA, not the original lender. Just a quick clarification of terminology, though: The "guarantor" is the fancy student loan word for collection agency (CA). That's who "guarantees" the loan if you default -- hence, "guarantor." The original lender has no official name, except "original lender" or "provider." Why they confuse us with their silly linguistics is beyond me. Doc
