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Defaulted private student loan {CitiAssit},Sold to Government Questions

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Defaulted private student loan {CitiAssit},Sold to Government Questions

I defaulted on a private (NOT federal) student loan (CitiAssist Loan) for undergrad, in June/Sept/Nov 2009. I could not keep up the payments. They Sold it to the Government and in my report "Citi" Says 0 Balance/Closed/or Paid As Agreed or Sold/Transfered to the Government: U S Dept Of Ed/Gsl/Atl After they were sold they now say Permanently assigned to the Govermnet or Transferred yet again on a few.


I have not received any mail or phone calls from any collection agency or the government. 

 

(I have not done any DV with any creditor at any point, the amount due looks fairly correct but I have not requested a DV or itemization of the original amount.)

My specific questions to you are below and I appreciate any other advice you can offer.

  • Will my credit be improved if I begin / negotiate repayment with the government or whoever has the loans now or will this fade away since it was originally a PRIVATE LOAN via CITI before it was sold and the 7 year are almost up at the end of this year, will it go away?
  • As the original creditor (Citibank Student Loans) sold the debt to the department of education/government and in this case does the SOL for private student loans stand or does that SOL go away since the government now has them?
  • Now that it is with the department of Ed/government the debt has new dates on it as opened and reported, the dates vary between 2010 and 2013, Will these fall off when the Citi one's fall off at the end of this year?
  • What will happen next if I do nothing (e.g. judgement, resell again, live on forever)?  I want to apply for a mortgage next year, and I am wondering if this will come up then or if it falls off will I be okay?  
  • If it does fall off at the end of this year do I need to still declare it in the mortgage application next year even if it does not show on my reports?

Since the original private loan from Citi information is due to fall off by the end of this year I wonder if I should bother with repayment as it is a hefty amount or just save that towards a mortgage for next year if this won't affect me. My true concerns are. Does SOL and DOFD still apply to the private loan that was sold to the govt or not, Do they still have a right to collect after SOL if it was originally a private loan and not federal, or does the fact that it was sold to the government make a difference and resets everything and throws SOL out the window?

Your advice is appreciated. I am just trying to understand as student loans seem to be a different animal.


July 2019 464-540
July/2019 Equifax-490 to 521 TransUnion-521 to 528 Experian-521 to 540
Current/2019 Equifax-555 (ck) TransUnion-556(ck) Experian-558
Mortgage Scores: Sept/2019 Equifax-Fico5 xxx TransUnion-Fico4 xxx Experian-FIco2 xxx
First Goal 580 by Oct/19 Second Goal 600 by Nov/19 Third Goal 620 by Dec/19 Goal Score:across the board 690+


3 REPLIES 3
Valued Contributor

Re: Defaulted private student loan {CitiAssit},Sold to Government Questions

Private student loans aren't sold/transferred to the government when they default.  It's just not a thing that happens.  Citibank did issue and service federal student loans back in 2000-2010 or so - this was the FFEL program which partnered with private banks to issue Stafford, PLUS and consolidation loans.  Something happened (I think it was about saving money by doing the work themselves?) and the Department of Education discontinued FFEL loans and started making all loans through the Direct Loans program.

 

It really sounds like this particular loan is a federal loan, so it should be eligible for rehab or consolidation to cure the default.  The reporting timelines still apply to federal loans, but the SoL never expires, so it's a good idea to get them out of default and on an affordable payment plan as soon as you can.  If you are certain these were private loans, there is something goofy with your reporting.

 

Have you checked the National Student Loan Data System?  Only your federal loans will appear there, does this loan appear there?

Message 2 of 4
Frequent Contributor

Re: Defaulted private student loan {CitiAssit},Sold to Government Questions


@SCF wrote:

Private student loans aren't sold/transferred to the government when they default.  It's just not a thing that happens.  Citibank did issue and service federal student loans back in 2000-2010 or so - this was the FFEL program which partnered with private banks to issue Stafford, PLUS and consolidation loans.  Something happened (I think it was about saving money by doing the work themselves?) and the Department of Education discontinued FFEL loans and started making all loans through the Direct Loans program.

 

It really sounds like this particular loan is a federal loan, so it should be eligible for rehab or consolidation to cure the default.  The reporting timelines still apply to federal loans, but the SoL never expires, so it's a good idea to get them out of default and on an affordable payment plan as soon as you can.  If you are certain these were private loans, there is something goofy with your reporting.

 

Have you checked the National Student Loan Data System?  Only your federal loans will appear there, does this loan appear there?

Wow, I never heard of it explained this way. Thanks for all of the insight. It was indeed with Citi, they even gave me a Citi card that held some of the funds so that I can buy my books. I will look into that Data system and report back what I find. I never knew they had a partnership with the FFEL program. Such a bummer. I will get back with more info when I look into it further. Thanks.

 


July 2019 464-540
July/2019 Equifax-490 to 521 TransUnion-521 to 528 Experian-521 to 540
Current/2019 Equifax-555 (ck) TransUnion-556(ck) Experian-558
Mortgage Scores: Sept/2019 Equifax-Fico5 xxx TransUnion-Fico4 xxx Experian-FIco2 xxx
First Goal 580 by Oct/19 Second Goal 600 by Nov/19 Third Goal 620 by Dec/19 Goal Score:across the board 690+


Message 3 of 4
Valued Contributor

Re: Defaulted private student loan {CitiAssit},Sold to Government Questions

My loans were originally with Citibank when they were first disbursed, which is why I knew for sure they participated in FFEL.  They were not the only private bank to do so though, and many of them also ran their own private student loan products at the same time.  I can't help but wonder if this confusion was a small part of why ED moved away from FFEL as well.

Message 4 of 4
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