@Booner72 wrote:Hi Ninjacookies - do you still owe any money on those student loans that are backed by the government? Are they in default? I'm just asking bc even if they are gone from your reports, there is a way that the lender will check for any defaulted government money....off the top of my head I can't remember the program they use or whatever it's called....someone will tho.
You are correct. Student loans that are in default, or that are now "held by the government" will cause you issues down the line in getting certain types of loan. Normally you receive the most trouble when you are trying to qualify for any other type of loan that is back by the government, such as a FHA or VA mortgage.
Now there is a student loan clearning house. The student version is http://www.nslds.ed.gov/nslds_SA/
There is also a "Government Financial Partners" version. This will allow financial institutions to see if you owe the government money through defaulted student loans and could cause a denial in other types of credit. Now, I do not know how often it is used if you are applying for something such as a car loan, or even a credit card, but it is 100% used if you are applying for any other government backed loan and you will not qualify for the government backed loan if you have defaulted on a federal student loan.
So, in short, yes, it could be gone from your credit, but it doesn't mean it will not haunt you. Also, be prepared for income tax returns to be withheld if/when the government begins to persue getting their money back. I don't think they are under any statue of limitations obligation.
Hope this helps. And with the link above, you should be able to log in and see your student loan status. Though, I must "warn" that I don't know how the system is tracked via the government. It could be one of those things that if you log in and see a bad account, you could be "waking the sleeping lion" and they could come knocking at your door asking for repayment. I have heard this from others, but I don't know the validity to it.
Current Score: Eq: 823 Tu: 830
@ninjacookies wrote:Great info, thanks
However, I'm still a bit hazy as to the whole issue. I DID complete the student loan rehabilitation program, which on their website clearly states:
"If You Are Already in Default
The Defaulted Loan Rehabilitation Program allows student loan borrowers who have established satisfactory repayment after default to remove the defaulted status completely from their AES-guaranteed loan account and credit report."
So I'm assuming this does already clear me? I still have all the letters, etc as well. Again, despite the fact I had the previous 'defaulted' lender account deleted from my credit report, it has since been rehab'd to 'pays as agreed' status on my credit report. I also know that currently, I am able to re-apply for student financial aid if I so choose. So I'm a bit unsure as to whether or not what both are stating applies to me and my ability to apply for new lines of credit. Thanks again for the help
Yes, if you have rehabilitated your loans and are no longer in default, then you would be permitted to apply for other government backed loans.
@Booner72 wrote:I still can't think of that program they use to find owed federal money. It is an acronym of some kind - Mortgage lenders run you through it during the qualification process and if they find something you are out of luck w/ a loan. gggrrrr I hate it when my mind goes blank.
Yeah, I am not sure what the name of the program is, so sorry I couldn't help ya out there. But if it comes to ya, let us know.