US Dept Ed. and Estimated Payment $724 on CR

[peme6040]

Recently I looked into a personal loan and was denied b/c they said I am making payments for student loans that equal over $1000/month.  I thought that was bizarre so I started looking into it.  Around the same time I talked with a bank about a mortgage preapproval-they also came back and said that my DTI w/ student loans is way too high.  I am on an income based repayment plan when I don't pay anything to US Dept of Educ for student loans.  I pay $50/month to AES for other student loans.  I received a credit report from the bank that was trying the preapproval for mortgage and it shows that US Dept of Education is showing an Estimated Payment of $724/month!!!  Is there anyway to have them report that I pay nothing right now, or do I have to get a letter each time my credit's pulled to prove this?  I feel like I'm stuck!

[p-]

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peme6040 wrote:..  I am on an income based repayment plan when I don't pay anything to US Dept of Educ for student loans.  I pay $50/month to AES for other student loans...US Dept of Education is showing an Estimated Payment of $724/month...

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Not sure if I understand completely... it soulds like you are paying 50 per month toward some loans, and nothing towards your Department of Education loans.  Are you in a forebearance period?  If so, that period will end eventually, and there will be regular payments due on the loans.  They should be considered as part of your DTI as they will come out of money you could otherwise use to make a payment.

When does your forebearance end?

[peme6040]

My loans confuse me too!!!  I consolidated my loans a few years ago because it seemed I had loans scattered with everyone and I was losing track of who I was supposed to pay and who I wasn't paying yet.  Some I defaulted on, one I remember doing a loan rehab successfully with. So now the majority of my loans ($36,000 worth) are with US Dept of Education.  I am in repayment with them but based off my income I am eligible for Income Based repayment-I don't pay anything for them but I reapply every 12 months for this.  It is still reported that I would be paying $724/month though which is hurting my chances at credit.  When I consolidated, I don't remember if I forgot to add these loans with AES/Suntrust or they weren't eligible to be consolidated.  I have loans totaling approximately $2900 that I pay $50/month for--which is fine.  I can afford this and it will drop my loan balance.  Is it becoming clearer now?  AES/Suntrust bought my loans from AES/BRAZOS back in 2009-when I did my rehab.  My 26 late payments (yikes) with AES/BRAZOS are still showing on my credit report and I'm going to see if they will be Goodwilled (not sure if they will agree to that!)

[jd352]

I'm being honest here... you're stuck.

From my experience, there is no way to "tell the creditor" what they should report. As far as I know, even if they are reporting erroneous information, you would file a dispute with the credit reporting agencies who look into the matter. In your case, there is really nothing incorrect other than you are delaying your payments in which it is just reported as paid as agreed.

In all fairness, all SL's report an estimated monthly payment, which in retrospect, is not incorrect. At some point, you WILL have to be making those monthly payments. For now, they are letting you get by. So, in essence, to ask a creditor to "fluff" your credit report to look good would be illegal. They are simply doing their job by reporting your balance, estimated monthly payment, and payment history. 

Think about it... even if the Dept. of Education sent the lender you are trying to get credit with a letter saying your debts are being delayed due to low income, do you still think the lender you are trying to get approved with would still  lend you money when you have already asked other lenders to delay payments due to financial hardship? It sounds like you are really going through a tough time financially, is there any person you could get a personal loan from and agree to make payments with a contract?

What exactly are you trying to get a personal loan for? There may be other options, but without more information it is difficult to point you in the right direction. 

[peme6040]

I kinda figured I was stuck...just wanted to know if there was any way around it.  I have decided to not get the personal loan-it was going to pay for a collection account that is set to drop from my CR in 2015 anyway.  And just so you know, my financial situation is not all that horrible.  But a single mother with 2 kids-no child support and working full time cannot pay $724/month for student loans.  My rent and car payment don't even equal that.   I do pay on some and am actually getting ready to switch my payments with USED over to paying a small amount a month in order to help lower my balance.  I have one bank that told me that as long as I can furnish a letter stating my payment plan, it should be fine for an underwriter on a mortgage.  The other said that they base it off of what USED reports I should be paying-which in my eyes is ridiculous.  Maybe if I had time for 3 jobs and could pay $724/month.  I guess I'm just a little bitter over my situation-trust no one-including parents who were supposed to help pay for college and then they didn't tell me they were going thru foreclosure and bankcruptcy at the same time--I would have never attempted to go to college and never been stuck with these bills. 

[jd352]

Just let the collection drop off as it isn't that far away anyway. in fact, even if you do pay them it can still remain on your CR for up to 7 years after the first delinquency date. I'm not sure how a mortgage underwriter views a paid off collection? I was not trying to "down" you or anything. We all have our issues with SL's - in my opinion, it disgusts me that you can finance a car at a lower interest rate than you can finance an education. They really are a double edged sword. On one hand, they allow you to finance an education that a very large percentage could not obtain otherwise. However, they leech off of you for many, many years with no way to get rid of them.

It's great that you are working on tackling the debt as it can be a huge burden, as I know mine was. Good luck!

For the future, see if you can join a decent credit union. Credit unions often offer low interest rate personal loans (and are typically a bit more forgiving) should you need one later on. 

[hilarybanks]

I don't think you're stuck. They are not reporting correctly. You should call them. I have an income-based repayment plan and each of my loan payments shows up correctly. If they won't change it, get documentation of how much your monthly payments actually are and send it to the credit reporting agencies. 

The only problem is if you have recently changed your payment plan, it can take a couple of months for them to update your report. My loan servicer will also send a letter to me showing my actual payments (looked into this back when I was looking for a mortgage) because sometimes other lenders don't understand how to acturately read student loans on a credit report. 

[peme6040]

Thank you for the encouragement jd352.  Student loans are hard.  I feel like I'll be paying them forever.  I'm just glad they are back in good standing and that I consolidated most of them together.  Now I'm not getting bills from 5 or so different places.  I've heard credit unions are good-my brother suggested it for a mortgage.  Definately something I'll have to look into.  As for the personal loan, I'm just not going to get one. One less bill to pay.

[peme6040]

HilaryBanks, you brought up a point I never thought of.  The credit report the bank pulled said the Estimated Monthly payment would be $724.  She said she has to go off of that information, even if I'm on a payment plan.  My own bank said that as long as I could furnish a letter saying what I pay a month then I should be fine--so I guess it depends on the bank.  I will definately talk to USED about their reporting and see where I can get!  Thanks for the info!

[TRC_WA]

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@jd352 wrote:

We all have our issues with SL's - in my opinion, it disgusts me that you can finance a car at a lower interest rate than you can finance an education. 

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Too bad an education can't be repossessed...