Rehabing federal student loans

[credit_questons]

I know this question has been asked before and I've read these boards up and down, but I'm afraid I still don't exactly understand how this works. So here is my question. I had several stafford loans through the North Carolina State Education Assistance Authority. I defaulted and I was in default status for over 3 years. I recently entered a rehab program. After nine months I will be rehabed through the collection agency (DCS) and then my loans will go back to the North Carolina State Education Assistance Authority. I don't have to find a new lender like some. NC takes them back if they are rehabed.

Question is. What happens to my credit report? The default status goes away, but what about all the years of late/no payments. Do they still show? The loans aren't going to a new bank/lender like some people's. They are going back to the original lender. What will my credit report look like? I know it will be better, but how much?

After I'm rehabed, I plan to make the required amount of on time payments and then consolidate. I have no idea if that will help my credit, but the lower payment will help me? Thoughts? Suggestions?

The rehab payment is steep, but I'm looking forward to putting this behind me and starting over. I've worked hard on my credit and these defaulted student loans and one credit card late payment in 2008 are my only blemishes left. I have removed errors and goodwilled all kinds off crap off my credit report.

Thanks for any insight or advice.

[credit_questons]

Nothing

[MarineVietVet]

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@credit_questons wrote:

Nothing

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Hi there.

Just be patient. This board is not as busy as others and it sometimes takes awhile for someone to come along who can help you. Don't give up. 

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[FicoTron]

i'm in the process of the same thing and am looking to hear from more than one person on where their tradelines stand after the rehab process.  My situation is similar in that the loans are going back to the original lender.  I have heard from a few sources that all of your lates are taken off and the the status changes to PAA with a history dating back to when you started the loan.  If this is true, it is the biggest gift in history for people who got into this mess.  So if anyone has finished a loan rehab and has some facts, cosider this a bump

[credit_questons]

I've heard this too, but it almost sounds too good to be true doesn't it? If this happened, my credit would be almost spotless (only one 30 day late from 2007 on a credit card would be left). I just can't get my hopes up.

Hopefully we will get an answer. I know that many have gone through this situation before us.

[Tazman81]

Well, I'm happy to say that what you are hearing is mostly true with regard to your federal student loans.  A rehabilitation program was enacted to "encourage" people to catch back up on their student loans and keep paying them since the ultimate guarantor is the federal government.

As you have mentioned, your student loans are going back to your original lender (which is great).  This does keep you from having to wait around until a different lender decides to pick you back up.  It is possible that when this goes back to your original lender, you will probably receive a new account number.  Once you have been rehab'd you should see the old loan (status and lates) come off of your credit, and then the "new loan" should be reporting with a perfect payment history.  I am not sure if they backdate it or not to the original loan date though.

Anyhow, you are correct that it is a gift, so be sure not to mess it up.  You can only go through a loan rehabilitation 1 time!  After you have rehab'd your loan, get your new loan, and you see your baddies come off your credit report, then go ahead and consolidate for a lower monthly payment.

[credit_questons]

Thank you so much for this easy to understand and valuable information. I really have something to look forward to now and it is going to make dealing with the steep rehab payments alot easier. I will have the motivation to stick with it no matter what! I think I can sleep better at night now knowing that an end is in sight. I know this info really helped me and I think it will help many other on here with the same question. Thanks again for taking the time to set me straight. Sometimes answers are hard to come by.

[phrza81]

Hi!

I rehabed my loans, which totals to 4 different accounts back about 2 years ago, it was pretty plain and simple. Once completed, all 4 defaulted accounts were deleted and replaced with new accounts and started fresh BUT!!!! my PRIOR TO default adverse records (30, 90, 120 delinquencies) were still there, who at the time was Sallie Mae as my lender/servicer. I received a letter from Sallie Mae/United Student Aid Funds (i think their partners), quoted,

"As a result of your rehabilitation, the lender/servicer that maintained the loan(s) prior to this default will be notified. It will be their responsibility to correct any adverse credit reporting that they may have made."

Now my defaulted accounts were deleted but Sallie Mae who made all adverse recordings were not deleting any adverse/neg records they have made. So I have consistently made efforts in sending letter (mail), phone calls and emails to Sallie Mae and all CB's many many many times. In result to my efforts, I found that Equifax & TransUnion, deleted all defaulted accounts and all adverse records prior to default. Experian is the only one that hasn't deleted any adverse/neg records prior to default but has deleted all defaulted accounts.

My SL are now with USA FUNDS and is still trying to get the rest of the adverse records from my prior to default deleted. 

Sallie Mae is a B*TCH to work with :/