All my student loans are in default

Anonymous · ‎07-01-2015

I have both federal loans and one private loan in default. I know the private loan is about 29K. They have also gone to collections.

Should I worry about paying these loans or instead concentrate on building my credit with other methods?

I don't know exactly what is in default and in collections either. How do I find out?

j615 · ‎07-01-2015

@Anonymous wrote:
I don't know exactly what is in default and in collections either. How do I find out?

First thing to do is to check your reports. www.annualcreditreport.com will give you a free report from all 3 credit bureaus once a year at no charge. The only thing they won't provide is your FICO scores.

InvincibleSummer3 · ‎07-02-2015

You can also check the national student loan database system for the status of your federal loans.

Anonymous · ‎07-02-2015

I would definitely go to annualcreditreport.com and get a copy of all 3 reports for free. You're legally allowed one copy of each report (Equifax, TransUnion, Experian) anually so see what accounts are open in there. You'll be able to see the lenders along with any past reporting (i.e. "OK" or "late" status').

For the federal loans you may be able to enter a loan rehabilitation program. This typically requires you to make a specific number of regular, on-time payments (NOT multiple payments as one lump sum, it must be spread over a period of months). Once completed, and once you can show you are able to resume payments, the loan may be reversed out of default status and back into repayment status. The default would be removed from your reports, helping you a ton. But you definitely need to see if this is an option and get in touch with them ASAP.

For private loans it may be too late to go backwards.. I don't know of many private loans that offer rehab options. Typically from what I've seen it's either (a) setup a monthly repayment plan, or (b) work out a lump sum deal to resolve the debt. Others may have had other experiences though.

These loans will never go away, so I would definitely make a point of resolving them now. Unfortunately the longer you go without addressing them the more aggressive they will be with their collections. Good luck!