Defaulted on my student loans years ago and thought they would go away. Nope. Lost my tax returns in Jan 2012 once again, but then my balance was about $1,100. I figured, well, I might as well just pay it off. But the guy at DCS (now Performant, Inc) told me not to pay it and rehab it to get my loan out of default and all the wonderful things it would do for my TLs.
Spent 10 months paying a measly $52/month, got out of default and paid the $513 final amount the next day. All for what? So I could get out of default? Hell, I could have paid $1,100 a year ago and been out of default...and at least had it help my credit over the past year. Instead I just incurred more interest and Great Lakes doesn't remove the negatives anyway. What a waste of time.
I feel like a member of the WB cartoons where the face turns into a donkey.
Were your loans picked up by a new lender before you paid them off? That would result in the creation of new, positive tradelines backdated to the start of your original loan (a positive you don't get from just paying them off). Also, once rehab is complete, the default status will be removed from the old loans (although not the lates), and the collection account will disappear from your credit report (rather than being marked as paid, paid collections still have a negative impact on your score).
Updates to your report can take 60-90 days. Although you paid some interest, rehab definitely has benefits that will save you that money in interest rates and hassle in the years to come.
Just read my post again... Sorry for coming across as a Debbie-Downer.
They were picked up by Sun Trust Bank, but I paid the final balance as soon as I got my congratulations letter. I did receive a paid in full letter.
If a new tradeline is created showing back to the start of my original loan, that would be amazing. I've been reading so much that I'm not sure what really happens. I first went delinquent in 2006 and the loans are from 2004 so they'll probably go away anyway. Regardless what happens, it does feel pretty good to know that I took care of my responsibilities.
Just wanted to provide an update on this for anyone else who reads the forums.
It's been about 45 days now and I think all CR's are as updated as they're going to get. I didn't see a new tradeline as SCF suggested, however, the 3 collection accounts have been removed. The original TL has been updated to Pays As Agrees.
The great news is I went from a EQ 549 to 645. I'm pretty stoked about that. The date of last activity on that TL is 7/2006, so I think that means it'll fall off this July. Really hope not, because somehow I now have an Excellent Payment History according to the CR. Either way, it feels good to know I'm crawling out from under that heavy burden of bad credit.
Anyway, I just wanted to give everyone any newbies a heads up from a real situation. My lender was GLHEC and my default was handled by DCS (now Performant, Inc).
I hope this helps someone!