student loan rehabilitation &a

Discussion in 'Credit Talk' started by marci, Nov 20, 2000.

  1. marci

    marci Well-Known Member


    Three of my student loans were successfully
    rehabilitated according to DOE requirements and have been sold to a new "Servicer C". The "Servicer B" with whom they were rehabilitated will be deleting its negative entries of these loans from my credit reports

    However, the loans were originally with "Servicer A" when they became delinquent and the negative entries by this servicer are on my credit report as well. When I wrote "Servicer A" to ask them to delete negative entries of my rehabilitated loans from my reports, and I sent documentation of the rehabilitation from "Servicer B", I later spoke with a representative from "Servicer A" who told me that they would not delete any of the loans - regardless of whether they had been rehabilitated or not. I told the
    representative that I was under the impression that deletions under Section 674.39 applied to any negative entry by any servicer pertaining to the specific loan rehabilitated. The representative told me that it didn't matter and that I would have to wait to receive an official letter from "Servicer A" refusing to delete it's entries, and then I should "dispute it with the Department of Education".

    Can anyone verify for me that my understanding of the Act is true? Aren't
    all negative entries of a rehabilitated loan supposed to be deleted - regardless of the servicer making the entry? In other words, if the credit report entry of a loan being rehabilitated by "Servicer B" is deleted by
    "Servicer B" - and that same loan (verified by the same disbursement date and
    original loan amount) is also negatively reported by "Servicer A", then under
    Section 674.39 - "Servicer A" must delete it's negative entries of that loan as well. When I asked two people from "Servicer B", they both affirmed that "Servicer A" should delete it's negative entries as well.

    Also, if "Servicer A" is ignoring the law, can anyone recommend possible legal recourses available to me? Are there attorneys who specialize in Higher Education Act compliance?

    For legal DOE reference, see:


  2. roni

    roni Well-Known Member

    RE: student loan rehabilitatio

    I wouldnot worry about it. Servicer A doesnot know what they are doing. I have read on other sites, that others are having the same unnecessary difficulty. I would agree that you should wait for a denial letter from servicer A. Or you could wait and dispute the item, once the others are deleted and then complain to the Dept of Education. Really they have not done anything wrong as yet. They are just telling you they will not remove it. Once they actually do not remove it, then you should complain. The Dept of Ed will want you to negotiate with the lender first before asking for their intervention. I did not go thru rehabilitation. But because I had other problems with my student loans, the dept of ed was trying to use this problem to help me. It did not work however. But in that process they explained this process to me carefully. I am certain that the original lender and the guarantor must remove the item from your credit report. If they do not, the ombudmsman's office of the dept of ed will intervention to reach a resolution. Good Luck.

  3. marci

    marci Well-Known Member

    RE: student loan rehabilitatio

    Thank you, Roni. I have already contacted the Department of Education's contact person for rehabilitation disputes. I'm waiting on her reply.

    In the meantime, I will write the CEO and legal office of "Servicer A" with information about this representative's statements and attitude. If they are required to delete my loans, then I suspect the CEO and general counsel will not be pleased with her statements.

    Thanks again,

  4. roni

    roni Well-Known Member

    RE: student loan rehabilitatio

    Send it to the legal office. That will sure get a response. I am waiting for my dispute to be finished with the department of ed. If I dont get satisfaction, I will be sending hints to the legal department as well. I just want to get a complete investigation done by the department of ed before I start playing hardball.

  5. Camaro68

    Camaro68 New Member

    Re: RE: student loan rehabilitatio

    I am in the same situation - I was wondering what ever happened with servicer A ? I had Citibank as my original lender (servicer A). I defaulted on the 3 loans (direct loans - Stafford) thru them. They were purchased by the guarantor in 1996 - NYSHED (NY State Higher Ed - servicer B). Servicer B turned account over to collections (Servicer C). I know the negative remarks from servicer B & C will be removed , but servicer A will not cooperate. Is servicer A required to remove negative marks due to Higher Education Act ?
  6. roni

    roni Well-Known Member

    Re: RE: student loan rehabilitatio


    Two major things. Beforehand, yes, you're right this infomation must be deleted.

    1. The info on cameron and associates is outdated. The sections you cite are not current. The law still applies, but it was moved to a different section. Do a "Higher Education Act" at the website for the current/accurate info. If you quote the wrong section, they'll ignore your request.

    2. I can not ever state this enough. DON'T TALK TO THE YAHOO WHO ANSWERS THE PHONE. These people are gatekeepers who have zero power to get anything done. They are put in place to delay your efforts and provide them time. They don't protect your rights at all! What you need to do it ask to speak with someone with the authority to remove the information. You only want to talk with them. It may mean several calls and phone tag- but it's the only way. Once you have their name, title and address you can switch to sending them letters if you want, but if you blindly send letters they're answered by the same people who answer the telephone.

    When you get that manager on the telephone, then quote the correct section number of the HEA, be able to provide the exact dates for you payments and wait for their answer. At that point, they know you know you law and you'll get the deletion.

    Otherwise, you'll hear the run around.... arguments about how consolidated loans can not be rehabbed and the such... (WRONG!)...

    If you want further info, email me.

    Hope this helps.... Keep us updated!
  7. marci

    marci Well-Known Member

    Re: RE: student loan rehabilitatio


    I wrote this initial post a year ago. In January 2001, I called the Ombusdman's office and got assigned a case officer to follow up on this. Concurrently, I was disputing with the CRAs over these entries (I read the relevant portion of the Act to CRA reps over the telephone as the reason for my disputes) and I was also e-mailing a "Pamela Moran" of the DOE (search for her name and my name on this message board) about this ambiguity, who agreed that "servicer A" had to remove their entries as well.

    By the time I began talking in detail with my Ombudsman's case officer, he had already been in contact with Ms. Moran over the ambiguity in the language. Both agreed that the "spirit of the Act" was to have all entries deleted, and he called "servicer A" to have them delete the information.

    All this happened over about two weeks and all entries were deleted. I personally think the CRAs just deleted after I explained to them what the Act said, or possibly "servicer A" chose not to verify whent he disputes came in.

    Call the Ombusdman's Office to get results on this point.

    Bkev, thanks for your gracious offer to help. I hope that the actions I took earlier this year would have met with your approval. :)
  8. Larissa

    Larissa Well-Known Member

    Re: RE: student loan rehabilitatio

    I know this is an old post,but I am hoping that marci or someone else can help. I have just finished rehabbing 2 Student Loans with servicer "b", I just got off the phone with them and they stated that all negative info will be deleted from the CRA...however, servicer "A" is also reporting and servicer"B" states they have no way to get them to delete, but that they have no right to report anyway because they don't own the loan??? So....does anyone have a good letter to send to the CRAs and or servicer "A" to get this deleted? Thanks

  9. marci

    marci Well-Known Member

    Re: RE: student loan rehabilitatio


    I didn't write any letters to the CRAs or servicers. I called and sounded angry and bewildered as to why "servicer A" could still have an entry on my report. I also read the relevant section of the HEA to the CRA rep (admittedly, I got a rep from TU who was bright and actually listened to me), had several e-mails with Pamela Moran, and got a very bright Ombudsman specialist who went to bat for me.

    If you formulate a letter, that's great. I hope that you have success. I just was blessed to have some good people working on my side at the time, so I didn't need to resort to letters.
  10. Smit

    Smit Well-Known Member

    Re: RE: student loan rehabilitatio

    What constitutes a rehabilitated student loan? Is it that is has been consolidated for a certain amount of time or what? I remember hearing about this when we consolidated but nothing since. Please help.
  11. marci

    marci Well-Known Member

    Re: RE: student loan rehabilitatio

    A defaulted student loan can be paid on for 12 months, "reinstated" - or rehabilitated - as a non-defaulted student loan, and then sold to a new servicer. The negative entries come off of your credit report.

    Generally, consolidation occurs when a defaulted student loan is payed on for at least 3 months, and then consolidated as a non-defaulted loan by selling the loan to a new servicer. The negative entries remain on your credit report, but the loan is considered "paid" and not in default.

    I have always been told that rehabilitation v. consolidation was always an "either/or" proposition. You could do one or the other, but not both. However, there was a discussion a while back with "bkev" in which he suggested that consolidated student loans could be rehabilitated after the fact - though one had to fight for it. I'm not really quite sure where the law is on that point.

    Below are two useful links, as well as tons more information if you do an extensive creditnet search for "rehabilitation".
  12. Smit

    Smit Well-Known Member

    Re: RE: student loan rehabilitatio

    Thank you so much, that is very helpful. I think we ended up consolidating them.
  13. ifhn166

    ifhn166 Active Member

    Re: RE: student loan rehabilitatio

    I'm trying to get my consolidated student loans rehabbed and have ran into a brick wall. Dept. of Education tells me they can't help because my loans were never with them. Say I'm stuck dealing with TGSL, who says since my loans are no longer with them (because of consolidation). Any one had success getting consolidated loans rehabbed? Assistance please?
  14. Andrew

    Andrew Well-Known Member

    Re: RE: student loan rehabilitatio

    Were you at any time lied to regarding rehabilitation vs. consolidation? If so, can you prove it? This could be your case!
  15. halen123

    halen123 New Member

    I am trying to consolidate my Federal Student Loans

    Hello everyone, I am a 21 years old college student. I am trying to consolidate my Federal Student Loans but the consolidation people want a bunch of info about the loans that for some reason I donâ??t have. Is there somewhere that I can get a list of the student loans that I have? Any help is appreciated. Thank you in advance.
  16. jlynn

    jlynn Well-Known Member

  17. Paying4it

    Paying4it New Member

    Rehab vs consol

    OK. I am in the middle of this right about now. I defaulted on the loans, I began school in 98, finished finally in 04, and am beginning to pay now.

    I am in a rehabilition program because I was in default. After I make 9 consecutive non delinquent payments of 570.00 I will qualify to have my loans reinstated and non delinquent. After that I can have my loans consolidated, and they claim that the loan will fall by 18% and alot of fees will drop off. You can rehab any loan! The problem is locating it, after you default on a consolidation they give the loan to someone else and that party can collect from you. The funny thing is that my loans total around 45,000 with fees and everything, and since 04 I have not had one single call or paper in the mail trying to collect anything. Now all of a sudden I am trying to do the right thing and am getting collections calls for medical bills from 92' ( I was a minor then) and other random stuff.

    I am just straight paying off this other loan, for 340 a month. It cannot be consolidated for some reason, it has to be lumped with something else.

    Always get online and search this stuff out before signing anything. Call the ombudsman to get clairification. They are on your side.

    Hit me up if you have questions, I will try to help. It is very confusing. Never agree to a payment more than you can afford.
  18. bustdebt

    bustdebt Active Member

    On the contrary, I think they do know what they're doing. They're harassing the debtor, plain and simple.
  19. bes4u

    bes4u New Member

    Re: student loan rehabilitation &a

    Hello everyone, i know that this thread has been going on for a while, but i have the same problem as the originator of this thread. A few years back i defaulted on my student loans with servicer A . After having my loans transferd to the gurantor( which we shall call servicer B), and my wages and income taxes garnished I finally rehabilitated them in sep 2008. they were sold to servicer C, and i was under the impression that servicer A, and B should remove all negative entries and defaulted statuses from my credit reports. Servicer B did exactly that as promised , while servicer A did not. I called servicer A at their customer advocates office and was told by jennifer that they had not recieved the letter of rehabilitation from servicer B , but once i send it to them that servicer A would remove all negative entries of my report. after i faxed the letter over a day later and called servicer A back to verify that they recieved the fax, another lady named janice basically told me that no such action would be taken and there is nothing i can do to change it. So i called the ombudsman's office and explained my situation, and they are currently trying to find a resolution for me. My questions for everyone is
    1) is servicer A supposed to remove the negative info on my credit report via the HEA act , or is it unclear?
    2) Has any previous people in this thread have luck with the ombudsman getting all the negative entries removed from their credit reports?

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