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Defaulted Perkins Loan options?

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Anonymous
Not applicable

Defaulted Perkins Loan options?

Loan info
- Loan Type: Federal Perkins
- Loan Date: March 2005
- Balance: $639
- Interest Rate: 5.0%
- Servicer: College that I attended at the time.

 

It is only showing in one credit report(Equifax) the following is how it shows

Credit Report entry
- Type of Loan: Education Loan 
- Comments: Collection Account
- Date Opened: 03/31/2006
- Date Reported 06/30/2014
- Date of Last Payment: 05/2012

 

I currently have the money to pay if off in full but would that be the best course of action? I read that with Perkins loans I have to contact the institution directly, is this correct?

 

According to Federal Loan repayment page it's not eligible for repayment plans such as Standard, Extended, Pay as you Ear, IBR, or ICR.

 

Suggestions?

Message 1 of 6
5 REPLIES 5
Tetraptych
Established Member

Re: Defaulted Perkins Loan options?

Dealing with a defaulted Perkins Loan now myself. From what I've been going through, I think if you pay it off now, even though the amount is relatively small it will remain as a Defaulted Loan on your credit record, which is a pretty big hit to your score. If it's actually in a defaulted status (rather than collections), you should be eligible for loan rehabilitation, which means if you make 9 consecutive monthly payments, all negative records from that loan are removed. I rehabilitated one set of defaulted student loans and it does work: my FICO scores shot up about 80 points once the rehab kicked in.

 

I'm really just starting to dig into cleaning up my credit, though, so someone with more experience may have better/more comprehensive advice.

Message 2 of 6
Anonymous
Not applicable

Re: Defaulted Perkins Loan options?

Thanks Tetraptych How did you go about initiating the rehabilitation? 

Message 3 of 6
Tetraptych
Established Member

Re: Defaulted Perkins Loan options?

I'd call the school where you took out the loans, they should be able to give you all the info you need, and set you up with a rehabilitation plan. Mine was able to come up with terms, negotiate a payment amount (less of an issue with such a small loan amount), and send everything over as a package to the collection agency responsible for the debt. I had about a five minute phone call with the collection agency that was responsible for the loan, then everything was all set.

It's actually a surprisingly simple and relatively painless process. So far, at least.

Message 4 of 6
ChargeItPlease
Regular Contributor

Re: Defaulted Perkins Loan options?

I just finished rehabbing my defaulted Perkins loan. I called up the school and spoke to someone in the Perkins loan department. He set things up with the school's loan servicing company for me. I made nine payments to the servicer. Pretty easy. I'm just waiting for the rehab to hit my credit reports.

Starting Score: 400s (2011) Current: EQ 655 (01-2014) Goal: 700 Last app: 01-01-14. No apps 'til 12-2014!
Message 5 of 6
scvbd99
Frequent Contributor

Re: Defaulted Perkins Loan options?

Yep, that's what I did with my defaulted Perkins loan.  Did rehab just like with my other 14 loans.  They actually completely cleaned up the tradeline for me after I got it back in repayment.  Wish the other servicers/CA's had done that.  

800+ for all 3 CRAs.

Student loan forgiveness/discharge FINALLY complete.
Message 6 of 6
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