topic Re: Rehabilitated SL, still reported as past due in Student Loans

Rehabilitated SL, still reported as past due

mike500 — Wed, 26 Jan 2011 14:05:27 GMT

Back in 2005, my student loans defaulted. I rehabilitated them in the first half of 2006 and haven't missed a payment since then. When checking my report, the original loans are being included in the total amount that is reporting as past due. It is reporting that the original amount of the loans are past due when I have now paid them down to less than half.

There are a total of 4 TLs (2 loans), 2 for the current loans, and 2 for the defaulted loans.

On the defaulted TLs, the account numbers are different than the loans I am currently paying on. Is this right even if they are the same loans? Should I call them? Should I send a GW for deletion of the TL, to be marked as paid, or to have the amount deleted?

Has anybody experienced this?

Thanks

Re: Rehabilitated SL, still reported as past due

Tazman81 — Fri, 28 Jan 2011 18:28:27 GMT

Hi Mike:

Just for clarification. These were federal student loans? Are they still with the same lender? (From your post it sounds like the answer to both of these are yes, but I just wanted to clarify).

Though I have not had any personal experience with the rehabilitation program, from what I've read, they do create a "new loan" once the old one has been rehabilitated. I think this is basically a technicalility so that they can stop reporting that "bad" loan on your credit and just start reporting on the "new good" loan. Yes, I would certainly call them. To let them know that your loan was rehabilitated yet the old one is still showing on your credit. I would ask if they could move that old loan to a zero balance (which it should be) and also remove it from your credit report.

Oh, one more thing that I thought of before I hit post... You did not consolidate these loans while they were defaulted did you? These 2 loans are strickly the loans that you had rehabilitated? The reason I ask is because if your loans were in default and you got a new consolidation loan and included them, then your credit report is correct (except for it not showing a zero balance on the old loan).

Re: Rehabilitated SL, still reported as past due

mike500 — Fri, 28 Jan 2011 21:08:46 GMT

Taz, Thanks for the reply.

Yes, both are federal and are through the same lender.

I will call them and talk to them about reporting a zero balance and possibly removing it from the report.

I did not consolidate these loans and they were the original loans that got rehabilitated. This is good news, I hope they will be able to help me out.

Thanks again,

-Mike

Re: Rehabilitated SL, still reported as past due

Tazman81 — Sat, 29 Jan 2011 12:47:05 GMT

Let us know what they say and which lender. Other's may have had experience with your specific lender that may be able to help. Good luck.

Re: Rehabilitated SL, still reported as past due

mike500 — Mon, 31 Jan 2011 15:24:17 GMT

ok, finally talked to someone and got some answers:

Recap:

4 TL's for 2 loans:

-USA Funds - 120+ days past due, balance of $3,000+ due, DOLA Oct 2004

-USA Funds - 120+ days past due, balance of $2,000+ due, DOLA Oct 2004

-Sallie Mae - Pays as agreed, balance of $1,700

-Sallie Mae - Pays as agreed, balance of $700 due

Called Sallie Mae, they gave me a phone number to a loan originator company. Gave them my SSN and they said that the account just needs to be updated to say that the account does not have a balance and is current.

This is currently hurting my credit score and showing a negetive remark. Does anybody have an idea as to the impact that this is going to have? Possibly negative?

Re: Rehabilitated SL, still reported as past due

kittylover — Fri, 04 Feb 2011 07:19:53 GMT

I have the same thing going on. The old ones were supposed to be removed as part of the rehabilitation processs. Several have not. In addition, a couple of the new loans are still showing the old past dues even though the report from the new company also records no late payments. Don't care about the two old ones much any more since they should come off in Nov. but am beyond frustrated by the other. Hard to know who I could call as the loans have changed hands a couple of times. I just file a dispute with the agencies, but I doubt they can/will help. Oh well, my credit score is coming back up in spite of them. Would love to know what else I can do if anyone has ideas. Apparently this is quite common.

Re: Rehabilitated SL, still reported as past due

Tazman81 — Fri, 04 Feb 2011 22:31:42 GMT

@kittylover wrote:
I have the same thing going on. The old ones were supposed to be removed as part of the rehabilitation processs. Several have not. In addition, a couple of the new loans are still showing the old past dues even though the report from the new company also records no late payments. Don't care about the two old ones much any more since they should come off in Nov. but am beyond frustrated by the other. Hard to know who I could call as the loans have changed hands a couple of times. I just file a dispute with the agencies, but I doubt they can/will help. Oh well, my credit score is coming back up in spite of them. Would love to know what else I can do if anyone has ideas. Apparently this is quite common.

Call whoever is reporting the baddies on your credit report. Along with the loan, it should tell you which company is reporting it. Then you can ask them to correct it as the loan has been rehabilitated. They may ask for proof of this, which is fine as you should be able to provide it.

Re: Rehabilitated SL, still reported as past due

gamegrrl — Fri, 11 Feb 2011 21:16:08 GMT

As I have found out the hard way, there's very tricky wording in the Higher Education Act.

Even on the Ed.gov site listed here, it states: "If you want the negative credit report made by the Department removed, you must successfully complete our loan rehabilitation program." Sure makes you think that if you rehabilitate your defaulted loans, that they'll REMOVE THE NEGATIVE CREDIT REPORT made by the Department.

Nope.

Upon further investigation, you'll find that they will remove the default status of the loan. However, the status will be changed to "paid by insurance claim" and all late payments will remain.

I'm currently working/battling with the Department of Education on this. They agree that the intent is to expunge any indication in your credit report of a "default" claim. They also said that "any notation of an account being transferred or an insurance claim having been filed and paid EQUALS a default claim notation, and should be removed".

I'm working with the ombudsman office at the DOE to get the DOE to live up to their promise and statements. The best I can hope for is to get the notations having to do with transfers and insurance claims being paid removed. Late payments will remain on the CR.

BOTTOM LINE: I believe that the statements and promises made by the DOE (such as the one I listed at the top of this post) are misleading and disingenuous. The negative credit report made by the Department is NOT removed when you rehab your loans, nor is it their intention to do so. They should not be allowed to promote rehabilitation in such a deceptive manner. This is simply wrong.

Re: Rehabilitated SL, still reported as past due

Tazman81 — Sat, 12 Feb 2011 13:55:04 GMT

@gamegrrl wrote:
As I have found out the hard way, there's very tricky wording in the Higher Education Act.

Even on the Ed.gov site listed here, it states: "If you want the negative credit report made by the Department removed, you must successfully complete our loan rehabilitation program." Sure makes you think that if you rehabilitate your defaulted loans, that they'll REMOVE THE NEGATIVE CREDIT REPORT made by the Department.

Nope.

Upon further investigation, you'll find that they will remove the default status of the loan. However, the status will be changed to "paid by insurance claim" and all late payments will remain.

I'm currently working/battling with the Department of Education on this. They agree that the intent is to expunge any indication in your credit report of a "default" claim. They also said that "any notation of an account being transferred or an insurance claim having been filed and paid EQUALS a default claim notation, and should be removed".

I'm working with the ombudsman office at the DOE to get the DOE to live up to their promise and statements. The best I can hope for is to get the notations having to do with transfers and insurance claims being paid removed. Late payments will remain on the CR.

BOTTOM LINE: I believe that the statements and promises made by the DOE (such as the one I listed at the top of this post) are misleading and disingenuous. The negative credit report made by the Department is NOT removed when you rehab your loans, nor is it their intention to do so. They should not be allowed to promote rehabilitation in such a deceptive manner. This is simply wrong.

Where are you getting this information? Can you provide the link. One part says after rehabilitation the loan status would be changed to "paid by insurance claim". That doesn't make sense. An insurance claim in paid out after an extended period of time of default where the lender see no hope of receiving payment back from the original lender, so a claim is filed with the government (the insurance of a student loan). Thanks.

Re: Rehabilitated SL, still reported as past due

gamegrrl — Sat, 12 Feb 2011 14:16:18 GMT

Hi Tazman81,

I included links for everything I have. The point I'm trying to make is that the Ed.gov site (link included below to the specific site page) says "if you want the negative credit report made by the Department removed...", even though that is not what happens, nor is it what's actually written into the Higher Education Act.

I have two student loans that I defaulted on and that were paid by insurance. I rehabilitated both of those loans a few years ago and have never been late with a payment. Based on the Ed.gov site quote in the paragraph above, I really thought that the "negative credit report" would be removed once I had rehabilitated the loan, but that hasn't happened.

The notations "transferred and Insurance claim filed and paid" still appear on my defaulted loans in my credit report. I understand that the notations of my late payments will, rightfully, remain on the record for those defaulted loans. What I don't understand is why the "negative credit report made by the Department" has never been removed, as was promised would happen on the Ed.gov site, once these loans were successfully rehabilitated.

The Ed.gov ombudsman office agrees with me, and has told me over the phone that "any reference to the default of the loans should be removed, and that includes notations or comments that the account was transferred and/or and insurance claim was filed and/or paid."

My beef is that once you've followed their rules and guidelines for loan rehabilitation, the promised benefits should happen without your having to fight for it for years.

Sorry I wasn't more clear in my first post.

Re: Rehabilitated SL, still reported as past due

Tazman81 — Sun, 13 Feb 2011 21:39:04 GMT

I was trying to determine where you are showing that the negative items would not be removed. It depends on each person's circumstances. Did you consolidate a defaulted loan and then default again? If this was the "original" federal loan that was defaulted, once you have rehabilitated it, then the bad payment history is removed from your credit.

So that others are not confused, the status of "Paid by insurance claim" has nothing to do with rehabilitation. A paid insurance claim is when you have defaulted on your student loan and the lender has to turn to the federal government to collect their money back.

If your loan was rehabilitated, and the previous ones not removed, then you would need to get proof from your current lender (the one that rehabilitated the loans) so that you can submit it to the previous lenders that the loans have successfully completed the rehabilitation program. Now, if these defaulted loans were consolidated into a new loan, then this would not work as it would not have been a true rehabilitation. I hope that clarifies things.

Re: Rehabilitated SL, still reported as past due

gamegrrl — Sun, 13 Feb 2011 21:47:50 GMT

The original lenders have been notified (over a year ago) that the loans were rehabilitated. They were not consolidated. The reporting on the original loans has not changed since they were rehabilitated. The old loans are still there (with all of the negative notations regarding default), as are the rehabilitated versions of the loans (showing good standing and no lates for over two years).

Re: Rehabilitated SL, still reported as past due

Tazman81 — Mon, 14 Feb 2011 16:37:02 GMT

@gamegrrl wrote:
The original lenders have been notified (over a year ago) that the loans were rehabilitated. They were not consolidated. The reporting on the original loans has not changed since they were rehabilitated. The old loans are still there (with all of the negative notations regarding default), as are the rehabilitated versions of the loans (showing good standing and no lates for over two years).

Have you tried working with your previous lender to find out about this being updated on your credit report.

Also, based on some of your previous postings, I have a message out to someone I've worked with before at the department of education to see if they can provide clarification with regard to exactly what is removed from the credit report once rehabilitation has been completed. I will let you know what I find out.

: Rehabilitated SL, still reported as past due

Anonymous — Sun, 20 Feb 2011 01:16:51 GMT

I actually had the same issue with Nelnet Loans. The original loans were defaulted and rehabilitated but Nelnet still reported the loans as 120 days past due. I called them directly to try and clarify the issue but they said that it would have to stay on my report that way until the 7 years was up. The lady explained to me that it would always show a 120 days late, with a zero balance, and the last reporting month which for me was April 2005. I had already disputed the items before with no luck but I tried again a few weeks ago through Transunion and Equifax. Both have since responded by saying that Nelnet has agreed to list the loans as current from April 2005 but it still shows when the loan went into default originally. Im not sure how this will affect my score just yet but I hope this may help you out. Just try an online dispute with the original creditor and my reasons were that the loan was transferred to another lender and it was no longer 120 days late. It worked for me so I hope it can work for you as well.

Re: : Rehabilitated SL, still reported as past due

gamegrrl — Sun, 20 Feb 2011 01:43:08 GMT

It's the "Current Status" that they're screwing up. It should say "Paid or Paying as agreed". Finally got someone at Dept of Ed to understand that and we'll see what kind of success she has in getting this fixed.

Re: : Rehabilitated SL, still reported as past due

Anonymous — Sun, 20 Feb 2011 03:45:33 GMT

Im sorry I meant current as in "paying as agreed".