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Federal Loan Paid in Full Before Rehab Complete

New Member

Federal Loan Paid in Full Before Rehab Complete

I am currently rehabbing a federal loan with Great Lakes. I have made 7 of 9 payments of $267 already. Here's the catch, I only owe $445 more on the loan, including the collection fees. Once i pay next month's payment, I'll only owe $178. So technically, I won't be able to make 9 monthly payments at the agreed upon amount. And I also won't have the loan picked up my another agency. I've looked through my agreement with them and can find nothing on this situation. I want to know if my rehab will still be considered a rehab, ie: removing bad tradelines, switching to paid as agrees, etc. Has anyone else ever been in this situation?

Message 1 of 7
6 REPLIES
Contributor

Re: Federal Loan Paid in Full Before Rehab Complete

Most likely the final payment will be whatever is left ($178) but to be sure you should ask Great Lakes themselves. There is a reason that the Department of Education only provides the money and maintenance contracts and not full service. They hire servicers like Great Lakes, Navient, NelNET, FedLoan to deal with the massive amount of people that they loan to and to cover questions, concerns, modifications, and rehabilitations. I personally have Navient that I deal with right now but in the past had NelNet and Sallie Mae with a finding that your servicer is actually your best friend when your life goes upsidedown even more so than a normal creditor like a bank. They might not be able eliminate your loan but they have wide flexability to adjust your payment schedule and amounts.

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Message 2 of 7
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New Member

Re: Federal Loan Paid in Full Before Rehab Complete

Thanks for the reply zerofire. I guess my question is more about how it will be classified. Is a loan that is paid in full during rehabilitation, still considered rehabilitated in regards to credit score effects?

Message 3 of 7
Frequent Contributor

Re: Federal Loan Paid in Full Before Rehab Complete

The goal of rehabilitating a loan is supposed to be to bring it out of default, right? Paying the loan off in full does this effectively.  Or at least I would think -- I can't seem to get anyone on the phone to say definitively that my paid off loan is out of default status.

Message 4 of 7
Frequent Contributor

Re: Federal Loan Paid in Full Before Rehab Complete


swamphog419 wrote:

Thanks for the reply zerofire. I guess my question is more about how it will be classified. Is a loan that is paid in full during rehabilitation, still considered rehabilitated in regards to credit score effects?


Paying the loan in full during rehab does bring it out default, however; the loan should not be paid off early or they may not count it. You have to make the 7-9 payments as requested and never be late. You should certainly call to verify with your lender. I cant speak from experience because I chose not to rehab but to consolidate to close those loans so they will age the lates. My lates are from 2012-13. I read here about several people that checked their credit and the lates weren't removed so I decided against it. 

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Message 5 of 7
Frequent Contributor

Re: Federal Loan Paid in Full Before Rehab Complete

Yes, there seems to be a lot of inconsistency between lenders and time frames.  YMMV.

 

You would think that since we all got snookered we should all be afforded equal opportunity to escape the nightmare, but alas, not the case.  

Message 6 of 7
Community Leader
Legendary Contributor

Re: Federal Loan Paid in Full Before Rehab Complete

Does your rehab agreement state that, in addition to removal of the reporting that the loan reached "default" (which is defined under the Higher Ed Act as having become 270+ days late), that any and all other reported delinquencies will also be removed?

Message 7 of 7