I defaulted on a "direct" student loan for 2k, I called the CA who is handling it and asked about rehabing the loan, they explained the process and told me I needed to send 5% down and pay $50.00/month for 12 months and then it would be taken out of default status. He explained after they recieved the first payment they would send out the application for the Rehab program. Is this normal?, It sounds "on par" with what I have seen on this board. My question is, do I need to get this in writing or am I OK to just send the first check off? BTW he did say I could send the check to the CA or to the greenville, TX payment center. Thanks for your reply., Lucas
I rehabbed my student loans - never signed an application or anything to do so. I talked to the lender and the CA and told them I wanted to rehab them - they wanted a huge 'downpayment' and I refused - I told them the HEA just says 12 'reasonable', on time monthly payments. Worked great for me. They want you to rehab the loans so you can trust them for the most part. After you rehab the loans, they can have the loans guaranteed again by the government and sell them to another lender - and not have to worry about you paying.
Try your best to get a written "good faith" agreement detailing that your 5% down and $50/month payments willl put you in a rehabilitation program at which point the servicer will reinstate the loan after 12 months of payments. American Student Assistance and their CA, Allied Interstate, did it for me.
I'm curious, what state was that loan in? I went to school in D.C., but my loan was taken out from my home state -- PA. I had 3 loans, 1 for each year I had to pay for college. I defaulted on all 3 of them. BIG mistake, because the following reason: you never want to mess with the state, as they basically can make judgments on your behalf without you ever being "invited" to court. That's how I got a wage garnishment. And trust me, that's not attractive on your paystub. Anyhow, the story ends as a happy tale. I decided to start fixing my credit, I called them up, they gave me the same deal: 14 monthly payments on time, and they would rehab my account. So, I paid 12 months, and they sent me a letter early, indicating that I successfully rehabed my account! How nice of them. Anyway, the state has the power to remove the negative tradelines from your credit report, which they did -- great news. And even nicer, they withdrew the wage garnishment immediately! Glad to see that thing off my semi-monthly stubs. And now, even though I'm still paying down the shrinking amount, the TLs appear as "revolving, paying, never late" on my credit report. As was said before, you're dealing with a state loan, so they won't screw you. As a matter of fact, my interest rates were at a pretty damn cool 4.75% for a once-delinq account. Now compare that to the evil compound interest industry! Good luck. If you have multiple derogs, that's the ideal one to start cleaning up first. There is no bargaining with them though -- I don't think validations, disputes, nutcases, etc will work very well against the state ;-)
