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Archive for the ‘Student Loans’ Category

Q: Hi, I have a pretty unique situation regarding student loan debt. I have about $100K in student loan debt. I did not find a job until about 8 months out of college and the loans were in deferment. The entry level position I obtained was not enough to pay my loans and I was playing catch up from the get go. The loans were then in forbearance and still are as I am not about to make $700 monthly payments. To top it off my co-signer filed for bankruptcy without me knowing and one of the creditors sold the debt and reported it as charged off and my credit is now terrible even though I was not the one who filed for bankruptcy.

Is there anything that I can do legally since I was not the one who filed and my credit is now shot? I feel like $100K will never be paid off. I regret going to college! What do I do?!? PLEASE HELP! Continue reading “I Can’t Afford To Repay My Student Loans. What Are My Options?” »

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A reader of AskTheMoneyCoach.com wanted to know how to deal with a defaulted student loan. Her question and an answer are provided below. Many thanks to Marlene Ware, of the National Foundation for Debt Management  for her expertise and providing the answer that follows.

Question: My husband’s Sallie Mae loan went into default and was just turned over to a collection agency. If he wants to do the rehabilitation program, is that through Sallie Mae or the collection agency? Also, who does he work with now: the collection agency or go back to Sallie Mae? If he makes payments each and every month to the collection agency will he be fine, no matter the amount of the payments? As long as he makes payments to the collection agency can they still do him harm, ie garnishment, etc?

Answer:

This is a pretty complex area with a lot a variables.  Without knowing what preceded the default I will try to give you an answer that will hopefully clarify your situation.

If the Sallie Mae loan was in default for 270 days and any attempts by the loan holder have been unsuccessful the loan will be turned over to the ‘guaranty agency’ in your state.  Go to :  http://wdcrobcolp01.ed.gov/Programs/EROD/org_list.cfm?category_ID=SGA  for the contact information concerning the guaranty agency in your state.  After he jumps through the hoops required to bring the loan out of default, the collection company will search for a financial institution to buy the loan.   Your husband will begin a relationship with this new loan holder and continue to make the payments as requested.

While in rehabilitation, he must make 9 voluntary consecutive on-time payments to the collection agency holding the loan.  If he is able to do that, he will see the following benefits of his hard work:

• His loan(s) will no longer be considered to be in a default status.
• The default status reported by his loan holder to the national credit bureaus will be deleted.
• He will be eligible for the same benefits that were available on the loans before the loans defaulted. This may include deferment, forbearance, and Title IV eligibility.
• Wage garnishment ends and the Internal Revenue Service no longer withholds his income tax refund.

I hope this gives you some useful information.  There is a great deal of information concerning defaulted loans on the Department of Education website.  Good luck!

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In this video you will learn a few student loan repayment strategies that you may not be aware of.

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A reader of AskTheMoneyCoach.com wanted to know how they could lower the rate on a student loan being paid to Sallie Mae. Here’s the question the person asked:

Q: Being fresh out of graduate school and still learning about the financial world, I consolidated my federal subsidized and unsubsidized loans through Sallie Mae at a fixed rate of 7% in 2001. I thought this was a deal at the time. Payments have been made on time every month for the past 10 years.

Continue reading “How to Lower Your Sallie Mae Student Loan Interest Rate” »

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