My credit is shot because my federal student loans fell into default and I’m looking to use my credit for a mortgageloan or to finance a vehicle. Luckily if you’re in this situation there are options available for you to restore your credit, however the only thing not on your side is time. Unfortunately if you’re planning on using your credit in the within the next 9 months you’ll have to pay-off your entire balance or meet the terms of a settlement compromise. Visit the repayment section (section 2 of Quick Start A-Z Guide) to learn more about the settlement and other options available to you. However even if you complete the settlement, your credit reports will still reflect that your federal student loan was once upon a time in default even after you pay it off. Now if you’re not in such a time crunch meaning you have more than 9 months to take care of your student loan issue then the Rehabilitation Repayment Program is the best option for you. Upon successful completion of the Rehabilitation Repayment Program your federal student loan will be taken out of default and assigned back to a lender. Once this process takes place the Department of Education will
update your credit report as if you have NEVER DEFAULTED on your federal student loan(s). Once again visit the repayment section (section 2 of Quick Start A-Z Guide) and utilize our Settlement and Repayment Calculators to find out the minimum amount you have to pay!
I just got denied for addition student loans/ financial aid because my federal student loan is in default. Are you trying to go back to school? If so, because your federal student loan is in default you’ve lost your eligibility for additional student loans and financial aid. So what can you do in this situation?
Unfortunately if you’re planning on attending classes immediately you’ll have to pay-off your entire balance or meet the terms of a settlement compromise listed in the repayment section (section 2 of Quick Start A-Z Guide). If you pay-off your federal student loan with a credit card the payment should post in 2 business day, if you plan on mailing a check make sure the funds are certified and your payment should post no later than 2 business days from the date your payment was received at Department of Education’s National Payment Center. Once the payment has posted to your defaulted student loan account you can contact Department of Education’s customer service line at 00-621-3115 and ask them to mail or fax the necessary documents over to the school for you to receive additional student loans and or financial aid. If you have no choice and you’re currently not working, you could consider consolidating your loan to get your loans out of default. However you MUST UNDERSTAND THE RISKS of CONSOLIDATING YOUR FEDERAL STUDENT LOAN WHILE IN DEFAULT. Before you consider consolidating your student loan make sure you visit the consolidation section on page 78 of the Student Loan Blue Print.
Now if you do not need to go back to school immediately. You’ll have time to complete the Rehabilitation Repayment Program which can be found under the repayment section (section 2 of Quick Start A-Z Guide). The Rehabilitation Repayment Program is highly recommended over consolidating your student loans (Read more about the pros and cons of consolidation on page 78 of the Student Loan Blue Print) simply because you can avoid having your collection fees capitalized into your principle loan balance. You can also have your default status removed from your credit report by completing the Rehabilitation Repayment Program compared to having the default status remain on your credit report for 7 years after consolidating. You’ll need to make your first 6 rehabilitation payments on time without missing a month in order for you to regain your eligibility for Title IV Funding which is your eligibility for additional student loans and financial aid. Visit the Rehabilitation Section on page 54 of the Student Loan Blueprint to learn more about the terms of rehabilitation and be sure to utilize our settlement and repayment calculators to find out what your minimum payments are!
30/03/2014
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