Benefits to Payments on Student Loans in Forbearance

[SweetLanis]

Hi ya'll!

Is there any benefit to paying on a student loan while in forbearance? Will the student loan servicer report to the credit bureaus for payments made while in forbearance?

My husband just consolidated his defaulted student loans last month. He is currently in the Covid-19 forbearance until 8/31/22. We are trying to raise his scores after the new tradeline hit his credit report as were supposed to close on our home on 7/28/22. His current balance is $15,675. If payments are reported, what would be a good amount to pay to have an impact for a score increase?

I appreciate any and all feedback!

[Adkins]

His issuer should report the payment to the CRAs - mine did. The benefit is paying down the principal without any interest, so the balance goes down much quicker. Is the loan showing as the high balance of  $15,675/$15,675 currently? Is so, then yes, bringing the balance down will help. 

[SweetLanis]

Thanks for the feedback @Adkins!!

I am hoping his loan servicer will report as well. I mean why wouldn't they right! 

Thanks again for taking the time to reply!

[Adkins]

You're welcome! 

[tmt90]

Did your lender seem concerned by the opening of the new tradeline as a result of consolidation during the underwriting process? I'm trying to figure out when I need to consolidate to meet the limited waiver by Oct 31 but there's a chance my new tradeline will pop up during underwriting. Planning to pre-approve in mid-July and close on a new build in Nov/Dec. Any concern here?

[SweetLanis]

@tmt90 

It turned out the consolidation actually benefited our situation.  My husband's mortgage scores increased nicely after the consoildation.  The consolidation was necessary in order for us to be removed from the default status and to qualify for our mortgage.  From our experience our lender just required explanations on the new tradeline and that seemed to suffice enough.  Also it took about a month or so for the new tradeilne to hit his credit report after the consolidation was completed.  If you think the consolidation would benefit you by lowering your monthly payment or just in general save you money I don't see a concern with it.  But I will say each person's situation is different and the positive result of our consolidation might not be the same for others.

All the best to you!

[tmt90]

That's very helpful thank you!

[teekay629]

Does he qualify for PSLF? If he does, then it can be a toss up on if there really is a benefit since this period counts as qualifying payments and you are marked as current on your reports. The only real benefit would be lowering the amount owed like you mentioned, but if you are on your way to forgiveness and you do not need the short term jump (depending on how much you can bring it down to), then you would technically be paying extra money. (Kind of like when they suggest not to pay a collections if it is supposed to fall off soon.)