The story: My wife and I want to buy a house with a FHA loan arounf July,2003. Her defaulted student loans will not allow us to do so, so I want to rehab. PHEAA rejected our offer of $50.00/month and said the lowest they will go is $265.00/month for 12-14 months. The say it is necessary that the loan be paid off in ten years, that's the reason for the payment. We cannot afford $265.00 as $50 is going to be hard enough until my other debts are paid. They tell me my only other option is consolidation which will not remove the negative tradelines. I need HELP in a bad way!
Andrew, try a counter-offer that meets them halfway. They're obviously not interested in the $50/month. Since student loans are guaranteed by the Department of Education, the guarantor is not "hungry" like the typical debt collector. You're probably going to have to do a whole lot better than $50. Remember, they expect you to pay back the student loan promptly in exchange for rehabilitation. Doc
Very true, but the HEA states that rehab is available after 12 timely payments. What is PHEAA's advantage in denying rehab? If they don't accept payment, this is what they are doing.
Keep in mind, $50 a month probably won't even cover interest that is accruing on the account(s). I think that's why they require a much higher payment. I was told one time when I was about to start rehab that the amount they want is what they estimate they could get if they garnished your wages.
When I tried to do rehab several years ago they set my payments so high that it was impossible. Just a thought but I would try explaining your financial situation. Give them examples of your expenses and show them how $50 per month is all you can pay. Maybe Marci will chime in on this thread she's the resident loan rehab expert. EdG
EdG, I did just that! I sent them a letter explaining my financial situation with a list of all debts and expenses including monthly payment. It was obvious that even $50.00 presented a hardship.
My wife is going to call and offer $108 monthly, (I'll have to get a part-time job to do it) which is halfway between our offer and theirs. Wish her luck!
If the loans are in your wife's name only, why doesn't she try to get a retroactive forbearance if she is unemployed. this will update her account to reflect deferred status and not the charge/off late status? I don't know how far back they will go with this but it is another option. then you could buy some time to enter the rehab payment plan.
Andrew, You may want to try to get the Ombusdman's office to assist your wife into getting an acceptable rebailitation payment agreement with the guarantor. Your wife needs to show a hardship based on her income, not yours. Also, ASA told me that by law they required 1.5% of the total balance per month unless they approved a hardship request. If your guarantor cannot/will not approve a hardship request, then ask the Ombudsman's office to "persuade" the guarantor to agree to it. http://osfaombudsman.ed.gov/ Or... meet them halfway and pay them $100 a month. Or do a really strict budget, cut back on some things, and pay $200 a month. The point is to get through rehab. Once you do that and the loans are out of default and sold to a new servicer, you willl have more options to lower the loan payments (i.e. income dependent payments, forbearances, etc...) and you will have more discretionary income. I know how you feel, though. I lived on $200 a month food/gas/necessities income for the 12 months I was in rehab and it was very hard.
it is a forbearance or a deferment, but as marci said she needs to do it based on her income. your other option, is to do the loan in your name only, since she is not employed,i assume her income is not needed to help you qualify.
