Student loan question--(long)

Discussion in 'Credit Talk' started by tareco, May 1, 2001.

  1. tareco

    tareco Well-Known Member

    I had a student loan in late 70's or early 80's. It went into default. I recently inquired into private student loans when considering going back to school so it seems they re-located me through that. The envelopes say Dept of Ed--the letters say they are collecting on behalf of Dept of Ed. This does not appear on any of my credit reports--have been getting the notices for about a year now. I want to pay them but have some questions first: I could only afford to make montly payments. But I'm afraid that if I do that it will re-appear on my credit reports and re-age them. I'm planning to purchase a house in the nest 9-12 months. So before I approach them to negotiate a payment plan, I'd like to know what my options are. Because it's so old can they garnish my wages or take any legal action against me? If I start making payments and for some reason can't keep up with them and they can report it to the CA's then I'm really screwed!

    I would like an answer from those of you who know FOR SURE what my options are and what could happen--or who I can call (what agency) to find out. Thanks for your help!!!
  2. roni

    roni Well-Known Member

    I understand your fears. But let me say something. You owe this student loan. You have to pay it. It will come back at the worst time. Entering a payment plan or rehabilitating it is the best thing you can do. As long as you have the loan in a satisfactory repayment plan you can get a FHA/VA mortgage.

    If they report it while you are applying for a mortgage, it may hurt you big time. However, I know someone who was garnished for student loans but passed VA guidelines

  3. Erica

    Erica Well-Known Member


    I read this thread, and KNEW you would reply.

    As always, great student loan info.
  4. tareco

    tareco Well-Known Member

    Roni, thanks for your response. Don't get me wrong--it's not that I'm trying to avoid paying it. But before I contact them to negotiate payment, I need to know what my options are. What if they don't accept my payment proposal. I just need to know what ALL of my options are such as if they can garnish my wages or is it past the SOL. Maybe this doesn't make sense to any of you why this is so important to me but it is. What I am looking for is someone who can tell me where I can call who can give me factual information. As much as I appreciate hearing about personal experience, that's not what I'm after here. I really want FACTS! Can anybody help? I may just have to contact an attorney familiar with consumer & credit issues.
  5. roni

    roni Well-Known Member

    There is no SOL when it comes to student loans. There is also NO LIMIT on credit reporting if unpaid. These are somethings you should know also.

    I dont think you are trying NOT to pay. I didnotmean to imply that.

  6. marci

    marci Well-Known Member


    The law states that - if the federal loans are in default - you can either consolidate or rehabilitate. Both options get you out of default and only one option gets the negatives deleted from the credit report.

    For either the consolidation or the rehabilitation, the law mandated by the DOE is that the payments must be 1.5% of the total amount owed. Period.

    Having said that, if you are unable to pay 1.5% you can apply, through the collection company, to have the amount reduced to lower than 1.5% and still qualify for consolidation or rehabilitation. You must be able to show a real hardship - and this action is almost always better handled trough the servicer. For myself I negotiated a lower payment with a collection company from hell only because I was blessed to have an understanding rep at the servicer. He was the go between with me and the collection company and he encouraged them to accept my hardship request.

    Concerning garnishment and tax offset, if the loans are in default and you have not made consolidation or rehabilitation arrangements, and you have not paid on the loans for more than 6 months, you are at HIGH RISK of having your wages garnished and have your tax returns seized.

    Your name is probably already on the IRS tax-offset database. The wage garnishment will happen without your knowledge. One day you'll get your paycheck and - poof - 20% of your take home is gone. By then there is nothing you can negotiate until the collection agency garnishes three months worth of wages and you apply for a consolidation with Direct Loans. Direct Loans is the only servicer I know that will accept defaulted loans through consolidation.

    Roni is absolutely correct. You want to take care of this today.

    BTW, you said that you want the facts and not people's experiences and that you might as well get a lawyer if you can't get the facts here. I agree that you should never rely solely on the advice on this board for your financial decisions, but keep in mind that the unique "experiences" of many people on this board deal directly with FACT and not what half-witted collection managers may want to tell you.

    This board has the most truth I've ever seen on a bulletin board when it comes to how the credit/legal industry really works.
  7. Shantel

    Shantel Well-Known Member

    Great post Marci!
  8. tareco

    tareco Well-Known Member

    Thanks again for all of the responses. I hope I didn't offend anyone by making the statement that I wanted factual info rather than personal experience. I agree that there is ALOT of useful information on this board, BUT--whether we're talking about student loans or anything else, often times circumstances are different and people don't always tell everything--things that my make a difference even if they don't realize it. I know for myself that I've read many, many posts on this board that SOUND very much like something I've experienced but yet the outcome is different. That's why all I was orignially asking for was somewhere that I could contact that could answer my specific questions.

    There's an attorney I worked with about a year ago regarding some credit issues and I think I'll call her.

    Thanks again everyone!
  9. Saar

    Saar Banned

    Facts are what you asked for, and facts are exactly what you got.

    As roni explained, student loans are not subject to SOL, and while in delinquent status, they can legally appear on your report till the end of time.

    A legal advice is indeed something an internet message board is incapable of providing. Consulting a competent attorney, as you suggested, is the way to go. Good luck!

  10. roni

    roni Well-Known Member

    It sounds like to me that you will ask as many people as you can until you finally get the answer you want.

    A lawyer cannot help you with your student loans, if you defaulted.

    You haven't offended me, b/c I know what I am talking about. I think you are the one who is sadly lost.

  11. David

    David Well-Known Member

    OK roni--help me out here (another student loan thang, keeping with the topic)...I sent a letter along with copies of my bureau to the Student Loan Servicing Center here in my state, and in effect, asked...."since my last student loan with you all reported late in 1995, and I consolidated them all into one loan in 1997, and have never missed a payment or even thought about being late since then, could you please delete that past late payments as it is obsolete?" (or something to that effect).

    From one of your posts, I gathered this would probably get me nowhere (I just sent it this week, so I haven't heard anything yet), BUT, in this thread, it seems I'm interpreting from one of the posts that if you consolidate (or rehabilitate--which I didn't do--and don't know what it means anyway), that they'll delete the past negative info anyway?

    What am I missing here? (Besides my Scotch on the rocks--LOL).

    And while we're on the subject, is there ANY WAY to get old late payments of student loans off your bureau--in roni's, or anyone's--experience?


  12. roni

    roni Well-Known Member

    you can get the lates deleted once they are 7 years old. You said 1995. So?

    I am rehabiliting a late on a perkins loan which will be off in October 2001. Lates can be rehabilitated.

    However, nothing can be rehabilitated once consolidation is done.

    I got lates off my staffords grad school loans b/c I showed them that the loans shouldnot have been in repayment and they had stolen my grace. I knew the rules and I was right. The dept of ed loves me.!!!

  13. David

    David Well-Known Member

    The "So?" part was to see if I could get them off any sooner than 2002.
  14. tareco

    tareco Well-Known Member

    Re: Student loan question--to roni

    No, I'm not sadly lost and now I'm getting pretty offended. I never said exactly what information I was looking for. Why is everyone assuming that I don't want to pay??????????? I AM NOT LOOKING TO GET THE ANSWER THAT I WANT!!! I had a specific fu king question that I wanted to ask an actual expert! Normally roni, I really respect your advice on this board--but I think that last response was extremely arrogant and uncalled for!! How dare anyone assume that I'm trying to not pay or other assnine assumptions. YOU DON'T KNOW EVERYTHING!

    While there is some really good info on this board and while roni, you offer a lot of it--there are times when I get really ticked off because people need to refrain from editorializing and making judgements about others!


    To Moderator:May I suggest we close this thread!
  15. roni

    roni Well-Known Member

    Re: Student loan question--to roni

    Every question that you have asked here I answered. I take offense to the comment that I am speaking from personal experience and not fact. I researched the hell out of student loans. I also took the time to answer your question, not out of arrogance but to help you out.

    I take offense to our comment in the thread period. NO one want to take the time to help you when you come back to the board and say to thanks but no thanks, I will call a lawyer. I took THAT comment as pure arrogance.

    I also have had 2 of the most miserable days of my 2001 new year. Maybe I shouldnot even be posting at all right now. Just got back from the police station.



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