Student Loans and Rebuilding Credit

[Anonymous]

This is amazing. My total debt is around $53,000. Out of that, I have about $52,600 of it in Student Loan debt. The remaining is a total credit card debt of $407. That's it. I've always struggled financially and my credit score is 488. Anytime I am offered to pay on my Student Loan, the amount is too high always, so I just can't pay it but want to rebuild my credit. This Student Loan debt I cannot rid myself of nor find a remedy. If I didn't have it, I am sure my credit score would be around 750 easily. Is there any companies or anyone out there know of a remedy to eliminate the Student Loan debt and rebuild my credit? What I am saying is that I am wanting to pay off the Student Loan Debt, but it is from over 20 years ago and what "they" want in terms of payment even in a modification is sooo high. I just can't swing it. Any suggestions would help or if anyone else is high in Student Loan Debt and don't know how to overcome it, please help.

[RobertEG]

I understand your confusion, and frustration.

Approaching it from a credit scoring perspective, I will offer some general observations.  Forgive me if they are incorrect, because data on your other credit history was not provided.

Student loans are installment loans, and not scored very highly in FICO unless default has occured.  They are usually lower-risk, low APR installment loans, since they usually have some form of securement.  Not high risk items. But 20 years later, and not paid, suggests some problems beyond credit scoring.

I dont know what your current FICO score of 448 is based on, but would speculate that you have had some major delinquencies in prior payments that have crushed your more important FICO impact on your payment history scoring.

What is your derog payment history?

Hiring a third party to secure "reduction of debt" is something I wont comment on, other than to tell you that they can never promise debt reduction.

That is solely up to the person who holds the debt.

[mauve]

Perhaps you can find help in the student loan forums.

All I can tell you is that there are rehab options available, as well as Income Contingent options.  I don't know what the eligibility requirements are for either. 

[Tazman81]

I agree with the 2 previous posts.  Are the student loans now considered to be in default? (usually meaning they have gone 120+ days past due).  Who holds the student loans?  Are they federal or private?  If they are federal student loans, many of the reputable companies offer a program where if you start making the payments and work with them, then they are able to wipe the derrogs from your credit, so this may be an option to help you.  I don't know what all the requirements are for this, but its worth looking into.  Also, if these are federal student loans that have not been consolidated, you may want to look at the department of education's website as they may be able to offer a consolidation for you.  They also have income sensitive repayment options along with an extended repayment option that can stretch the debt over 25 years verse the standard 10 years.  Just know that although it will make your payments lower, the amount of interest that you pay on the student loans will be much higher because of the longer term.  Good luck, and let us know.

[wednesdayaddamsd]

There is now something called income based repayment. The lender can set it up for you. Contact your lender. Or, google income based repayment of student loans, you will find a website I think that is called studentaid.gov or something like that. It has an income based repayment calculator that tells you how much you would pay, based on your income.