Yes. It's incredibly misleading. And, frankly, I believe it's actionable. If I were an attorney with the proper know-how and credentials, I would go after this like a dog on a bone.
@Anonymous wrote:
@gamegrrl wrote:What really gets me is this: Look at the link below and check out the next to last header - How can I fix my credit
http://www.ombudsman.ed.gov/resources/faqs/fixproblem_faq.html
You'll see that it says: If you’re having credit problems you may want to consider loan rehabilitation. Under this program, a new loan is created that removes the default status from your previous loans. If you are approved for rehabilitation, all derogatory information placed in your credit bureau files by the Department of Education or any of its collection agencies will be removed.
I defaulted several years ago. I completed rehabilitation of my loans a couple of years ago. The derogatory information is still there. It's apparently the one thing standing between me and a home equity loan right now.
Lame.
wow, that is definitely misleading! that is not how it is done in practice and it is not consistent with the applicable law/regulation. there is nothing that requires "all derogatory information" to be removed. someone should write them a letter, because a lot of people get their hopes up only to find out that's not how it works.
20 USC § 1078–6 (C)
Upon the sale or assignment of the loan, the Secretary, guaranty agency or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency or holder, as applicable, reported the default of the loan, to remove the record of the default from the borrower’s credit history.
34 CFR § 682.405 (b)(2)
The guaranty agency must report to all national credit bureaus within 90 days of the date the loan was rehabilitated that the loan is no longer in a default status and that the default is to be removed from the borrower's credit history.
the applicable law for FFEL (stafford) loans is 20 USC § 1078–6, found here http://www.law.cornell.edu/uscode/uscode20/usc_sec_20_00001078----006-.html
the applicable regulation for FFEL loans is 34 CFR. § 682.405, found here http://law.justia.com/us/cfr/title34/34-3.1.3.1.40.html#34:3.1.3.1.40.4.40.6
the terms for rehabilitation of perkins loans are essentially the same as stafford loans.
Ah, I knew I had seen someting somewhere with language such as that. But like you said, very misleading, but then again, I think it is all in who interprets the law. I also think that is probably why we have seen some people able to get the entire derogatory account removed from their credit, whereas others have only had the status changed. So, yeah, I'm still on the fence, but from now forward, any advice would be to just refer people to your links and let them read for their self as I was one of those that was sure the entire account was removed, and based that off of other items I had read and the many experiences I've come across. Anyhow, thank you both for the good information.
Current Score: Eq: 823 Tu: 830Two things that I discovered over the past 24 hours that have made a HUGE difference:
- You can have the feds mail you a letter stating that you have rehabilitated those loans. I would think that might be good to attach to your CRs, if that's possible.
- Much, much better is the National Student Loan Data System www.nslds.ed.gov - Go in there and look at the report page for each of your rehabilitated loans. It says there plain as can be: Not in default or "non-defaulted". Just right click on the page and save as a PDF. I did this today and within two hours was approved for the home equity line of credit I'd been hoping for.
That Federal data system IS the bottom line. That is what dictates EVERYTHING about the status of your student loans, and is the final authority. I found all my info there to be dead on perfect. And now I have something official to show the CRAs and whoever else needs 'proof'.