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New Member
Posts: 10
Registered: ‎06-14-2008
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Student Loans in Collections

Hi, I am new here and will probably be asking quite a few questions :smileyhappy: I looked through the forum for this question but was unable to find it, sorry if it is a duplicate somewhere. My fiance and I are trying to improve our horrid credit. He has fed student loans that have recently been sent to collections. I read on these forums that once something is in collections theres not really a point in paying them as they arent going to improve your score any. I also read that fed loans never fall off your credit.. so is he screwed forever? Can anything be done?
Senior Contributor
Posts: 3,494
Registered: ‎05-25-2008
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Re: Student Loans in Collections



ceruleansoul wrote:
Hi, I am new here and will probably be asking quite a few questions :smileyhappy: I looked through the forum for this question but was unable to find it, sorry if it is a duplicate somewhere. My fiance and I are trying to improve our horrid credit. He has fed student loans that have recently been sent to collections. I read on these forums that once something is in collections theres not really a point in paying them as they arent going to improve your score any. I also read that fed loans never fall off your credit.. so is he screwed forever? Can anything be done?




Okay, I am not an expert, but I would seriously advise your fiance to look into rehabbing his loans. That would mean a $50 (minimum) payment, each month, on tme, for 9-12 months (depending on the type of loan). At that point, he will be fully rehabbed and his credit will boost on that score.

If he doesn't, and just ditches this loan, you'll both suffer for it after you're married, in terms of wage garnishment, loss of IRS tax refunds, credit tanking even further ... and if you own a house, they can attach a lien to it. If you don't own a house and would like to, you can bet your bippy that they'll either deny you a mortgage or will force you to either pay off the loan or at least, start and finish rehab.

Bottom line is that it has to be paid back. There is no SoL for student loans ... and the consequences can be EVIL!!! For one thing, if he truly defaults and waits a year or two to rehab (eventually, he will have no choice), you can expect the Fed gov to tack on 30-60% in collection fees. And obviously, as time goes by, the interest increases.

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Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!

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