Student loan deferment mix up!

[tangerinze]

Hi!

My fiance had defered his federal student loans after graduation... they are still defered, but he was under the impression that sending in the federal paperwork would defer ALL of his student loans--- but the ones from AES (state gov) were never deferred, or defered for a month or two here and there, which I found weird. There are 9 total late payments marks, ranging from 30-120 days. Would he be able to talk to AES and explain that he was not informed that deferring his federal studen loan would not defer the AES one? From talking to the federal loan phone operator he was under the impression that that phone call defered both loans. Could the late marks be removed? 

Also, his mom thought that she was doing him a favor and set up his student loans with her email, phone and address when she was helping him when he started school. But she has parent plus loans in her name for her other children- so any correspondence from them for him was being ignored (she threw out mail, got all the emails at her address, and would pick up and hang up the phone in an attempt to avoid HER loan payments) which screwed him up royally.. this all only came about because one day we were over for dinner and he picked up the phone and it was a student loan call for him. Since then he finally got the info and was able to change things to his name and set up monthly payments.

What should he do (if anything) to fix/ remove these late marks? Other than just keep on keepin' on and let time fix it. 

[SCF]

You can send a goodwill letter to the lender explaining the circumstances and asking them to adjust the reporting for the lates that are accurate.  If there are any mistakes, you should start by asking the lender to correct them (and sending documentation to prove your case), and then proceed to a dispute with the CRAs if that doesn't work. 

Unfortunately, it sounds like most or all of those lates may be accurate.  It is the borrower's responsiblity to keep their contact information up-to-date with the lender, and verify that deferments include all of the loans that you want them to.  If you had multiple servicers, it's easy to miss a loan or two, but deferments are handled by each servicer and only for the loans that they service.  The National Student Loan Data System is a great way to check on the status of all of your federal loans going forward.  He should also be proactive in making sure the servicers have his updated contact info, and if possible, register with their websites so that he can check his loans periodically and make sure everything is going well.

[tangerinze]

Since we have starting living together he has since changed and updated all of his contact info.. unfortunately, the mailing address and home phone were technically correct, all contact was just being intercepted... ugh! I know that all of the late marks seem to be correct, even after I reviewed them. I haven't deferred a loan or missed a CC payment yet, so I am all new to this. Just wanted to see. All of his loan accounts are currently "paid as agreed" and he has no outstanding debt to them, just a bunch of older late marks that show on his credit from 6months ago. 

[tangerinze]

Also, would anyone happen to know what that "rehab" program is? Everywhere I look on here I see it, would that help his student loans and the late marks?

[bahbahd]

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@Jonesarrr wrote:

Also, would anyone happen to know what that "rehab" program is? Everywhere I look on here I see it, would that help his student loans and the late marks?

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Are they "paid as agreed" with $0 balances and closed? Were they consolidated or just completely paid off?

Rehabilitation programs you keep seeing are for people that have let loans go delinquent for 240 (or around that) days and the borrower has completely defaulted on the loans. The loans are considered in default and uncollectible by the servicing agency. At this point they are reported as loans in default and are transferred to federal government or one of their assigned collection agencies. Defaulted loan balances increase tremendously as they are hit with enormous fees and penalties leading up to and at the time of default.

Through a loan rehabilitation process, a borrower agrees to make nine consecutive payments to a collection agency. Once these payments have been processed, the loans are eligible to be reinstated as new loans once they are purchased by a new lender (picked up by a new bank.) Borrower will have new tradelines reflecting the new loan accounts being serviced through a new loan servicing agency.

Once this is all done, the law states that the original loan accounts should have their default status removed. Apparently some time in the recent past ,when rehab was the rage  due to defaults being so common, there were many interpretations and approaches to what should be removed from borrower's credit reports. Some people had default status and all late payment remarks removed. Old accounts were completely being reported as positive accounts with no derogatory remarks at all. Others had the whole declaratory tradeline removed. Of course these lucky people would see huge gains in their credit profiles. Success would depending on which servicing agency was reporting. Now it seems like most have figured out the law and put in procedures only to update the old loan status, removing just the default notation.