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Valued Member
chewchowlady
Posts: 25
Registered: ‎10-12-2013
0

Considering Pay Off

I have 2 student loans that were aquired in October of 2003 - both are now down to a balance of less than $1000.00. I am considering paying these in full, just to get these debts off my file. However, being that they are over 10 years old, will they come off my report and no longer count towards by lengthy positive credit history? With minimum payments of $39 (HAHA) - they are slated to not be paid off until 2019. My interest is only 2.1 - but still ... interest is interest. 

 

Any advice is appreciated!

 

 

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Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012
0

Re: Considering Pay Off

Even after they're paid off/closed, they'll continue to report up to ten years. You won't immediately lose any of the good these have done you.

Valued Contributor
Luscher
Posts: 1,147
Registered: ‎03-24-2013
0

Re: Considering Pay Off

pay it off. why waste money? It will continue to report for 10 years or more after the account is closed.
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Valued Member
chewchowlady
Posts: 25
Registered: ‎10-12-2013
0

Re: Considering Pay Off

Thank you both. I was under the impression that once an account ages to 10 years it will come off the report. I didn't realize it reports 10 years AFTER pay off. Learning more every day. Thanks!!!

 

 

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Garden since 11/14/2013 - No need to apply for any new credit until closing on my home! (Summer 2015)
New Visitor
marjoriehndly
Posts: 1
Registered: ‎10-17-2013
0

Re: Considering Pay Off

Hi guys!

 

Really glad I found this site. 

My husband's student loan is in high default status . We have an active wage garnishment out from his paycheck and he's the only source of income right now .The current balance of his student loan is 8,034.15 . Now, I talked to some people in the Dep.of Ed and see if they can help us stop the garnishment with some settlement offer or some other ways. They did give me the pay off amount of is 5,904 which must be paid within 30 days! . OR to do the rehabilitation which will take 9 mos. Honestly , I am not so familiar with how that rehabiliation process goes .I would appreciate anyone will try to help me out with that. Lastly , we can request for a hearing to prove that it's causing us hardship . I don't think it will work for us really. 

 

Honestly, the idea of just paying off sounds better to me. But after reading your posts that even if we close the account it will still show in our credit report for 10 years!!!  So I'm kinda discouraged now to do it. What do you think will be the smartest way for us to handle this ? Is rehabilation good ? 

 

Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012
0

Re: Considering Pay Off


marjoriehndly wrote:

Hi guys!

 

Really glad I found this site. 

My husband's student loan is in high default status . We have an active wage garnishment out from his paycheck and he's the only source of income right now .The current balance of his student loan is 8,034.15 . Now, I talked to some people in the Dep.of Ed and see if they can help us stop the garnishment with some settlement offer or some other ways. They did give me the pay off amount of is 5,904 which must be paid within 30 days! . OR to do the rehabilitation which will take 9 mos. Honestly , I am not so familiar with how that rehabiliation process goes .I would appreciate anyone will try to help me out with that. Lastly , we can request for a hearing to prove that it's causing us hardship . I don't think it will work for us really. 

 

Honestly, the idea of just paying off sounds better to me. But after reading your posts that even if we close the account it will still show in our credit report for 10 years!!!  So I'm kinda discouraged now to do it. What do you think will be the smartest way for us to handle this ? Is rehabilation good ? 

 


Can you pay the loan off completely? That is indeed one way to go, as it would then be all out of your hair. BUT for many of us, rehab offered some serious perks, namely that it gets your credit back in shape a lot faster. The deal with rehab is that you make nine monthly payments, and at the end your loan is updated to show good payment history from the date of default forward. That is a big draw for many people.

 

More info here: http://www.studentloanborrowerassistance.org/collections/federal-loans/getting-out-of-default-federa...

 

and here: http://www.studentloanborrowerassistance.org/collections/federal-loans/getting-out-of-default-federa...

 

Good luck!

Regular Contributor
Rikku
Posts: 200
Registered: ‎09-21-2013
0

Re: Considering Pay Off

[ Edited ]

chewchowlady wrote:

I have 2 student loans that were aquired in October of 2003 - both are now down to a balance of less than $1000.00. I am considering paying these in full, just to get these debts off my file. However, being that they are over 10 years old, will they come off my report and no longer count towards by lengthy positive credit history? With minimum payments of $39 (HAHA) - they are slated to not be paid off until 2019. My interest is only 2.1 - but still ... interest is interest. 

 

Any advice is appreciated!

 

 


Assuming you have the cash to pay them off early, I would do so and save yourself the interest. I wouldn't take cash out of my emergency fund to pay off a student loan early, because if an emergency comes up and you don't have adequate cash to cover it, you'd end up putting it on a CC (or taking out a personal loan) with higher interest than the SL. If you can swing it without using your emergency fund, however, I'd pay it off now. Or if paying them all at once would stress your finances too much, I'd sit down and plan out what you CAN afford in extra payments to get them paid off early.

 

I have spreadsheets for mine, so I don't lose track of what I want to pay off next! :smileyhappy:

Regular Contributor
Rikku
Posts: 200
Registered: ‎09-21-2013
0

Re: Considering Pay Off


marjoriehndly wrote:

Hi guys!

 

Really glad I found this site. 

My husband's student loan is in high default status . We have an active wage garnishment out from his paycheck and he's the only source of income right now .The current balance of his student loan is 8,034.15 . Now, I talked to some people in the Dep.of Ed and see if they can help us stop the garnishment with some settlement offer or some other ways. They did give me the pay off amount of is 5,904 which must be paid within 30 days! . OR to do the rehabilitation which will take 9 mos. Honestly , I am not so familiar with how that rehabiliation process goes .I would appreciate anyone will try to help me out with that. Lastly , we can request for a hearing to prove that it's causing us hardship . I don't think it will work for us really. 

 

Honestly, the idea of just paying off sounds better to me. But after reading your posts that even if we close the account it will still show in our credit report for 10 years!!!  So I'm kinda discouraged now to do it. What do you think will be the smartest way for us to handle this ? Is rehabilation good ? 

 


Do you have the cash to pay it in full? Or would you have to put the payment on a CC, take out a personal loan, or borrow from a 401K? Forgive me if I am wrong, but I am assuming that if you had the cash sitting around, you wouldn't have defaulted on the loan in the first place. If you don't have the cash, I would not consider borrowing from another source to pay this off. You'll probably end up paying a higher interest rate and you'll still be stuck with a bill that you can't pay.

I would take the rehab option. Essentially, you agree to a monthly payment for nine months - then after the nine months of successful payments, the loan is rehabilitated and they remove the default status. Once it's rehabilitated, you'll have all the normal options of deferment, forbearance, and various repayment options that come with federal SLs. Hopefully someone here can weigh in on whether the rehab process stops wage garnishments.

 

The major advantage of rehab is that it removes the default status and the loan is back in good standing. If you have the cash to pay it off, I would suggest rehabbing it first to remove the default, and then paying it off. If you don't have the cash to pay it off once it's rehabbed, you can defer it or make normal payments. In contrast, if you pay it off without rehabbing it, the major deliquency will stay on his CR until it ages off.


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