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National Student Loan Program versus Department of Education. What's the dif?

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Valued Member

National Student Loan Program versus Department of Education. What's the dif?

Quick question for you student loan pro's. 

 

All of my defaulted student loans except one were taken over by the Department of Education and my credit reports reflect this. The one loan not labled as a "U.S. Department of Education" account in collection I've verified on nslds.ed.gov as an FFEL Stafford Subsidized loan. It is no different than all my other federal loans which are FFEL Stafford or Direct Stafford.

 

Any idea why this one federal loan randomly would not be under a U.S. department of education account. They all defaulted and got taken over at same time. It currently only is showing up on Equifax as a closed account in collection status. Is it at all possible somewhere the system just forgot to transfer it to a USDOE loan? 

 

I'm mostly asking because I'm expecting all of these negative loan acocunts to fall off my credit reports in the next 18 months (which will make my score basically perfect) and then i'll probably pay them in a lump payment. I read somewhere that loans can stay on credit report up to 7 years after they are taken back by the government even if that is more than 7 years from date of first delinquency so I just don't want any funny business next year because this one loan may have not been taken back by the department of education.

 

Worst case I'll do some type of rehab or consolidation but at this point I've lasted almost 7 years without these loans seriously affecting my life (just accrusing stupid interest), so I'd prefer to just have them fall off my reports and deal with the debt on the side. 

 

Thoughts?


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 1 of 6
5 REPLIES 5
Legendary Contributor

Re: National Student Loan Program versus Department of Education. What's the dif?

Federal Family Education Loans (FFEL) are covered under the provisions of sections 421-440 of the Higher Education Act.

Section 430A mandates reporting of delinquencies to the CRAs, and they are exempted from the normal credit report exclusion provisions until the loan is repaid.

 

Cellections do not become excluded in the normal 7 years plus 180 day exclusion provisions of the FCRA.

They can remain indefinately until the loan is paid.

Message 2 of 6
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Valued Member

Re: National Student Loan Program versus Department of Education. What's the dif?

Thanks for the info Robert. 

 

After some additional digging I think I figured out the issue. My Navient and Great Lakes serviced loans were never put in collection by the servicers. They were just transferred back to USDOE once they defaulted more than 120 past due. NSLP was servicing one specific FFEL loan and once that defaulted they removed all other records and just placed a collection account only on Equifax, but did not send the loan back to USDOE. Luckily they haven't been doing monthly updates on this collection. Perhaps this is because they are trying to hold onto their remaining loan servicing portfolio since NSLP had to lay off a bunch of people when the government went to Direct loans which virtually destroyed any new FFEL servicing business. My other loans being held with USDOE update monthly with a collection "status" as expected. 

 

I think my best plan moving forward is to Rehab all of my federal loans (which includes the NSLP FFEL loan in collections) and once they get picked up by a new servicer I can dispute all of the USDOE collection accounts and the NSLP collection account. From what I've been reading these should be easy to get removed once rehab is complete and if I'm lucky I might possibly be able to get Navient and Great Lakes to remove the lates from my reports but that depends if I catch them on a good day. By the time I finish rehab those lates will only show for another year anyway so if they don't remove them it won't be the end of the world. 

 

Any idea how much monthly loan payments increase AFTER loans are rehabilitated and picked up by new servicer?


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 3 of 6
Community Leader
Valued Contributor

Re: National Student Loan Program versus Department of Education. What's the dif?

I agree the best option is to get all of the loans out of default. Preferably before they start taking your tax refund or garnishing your paycheck.
Your options are rehab it or consolidation. Consolation would get them out of default quickest but doesn't guarantee the removal of the default. Unless you need to get a home loan ASAP, I'd recommend rehabbing as you decided. Getting the lates removed is a possibility but the rehab process in itself does not dispute this. At least if you rehab, the default will be removed.
There rehab payments are often quite affordable, and once you are finished I recommend one of the IDR plans. Depending on your income, the payments can be as low as $0. REPAYE and IBR are the most popular. You can estimate what your payments will be by entering your loans manually into their payment estimator. Don't sign in because your loan status isn't right yet. (Ignore the second number in the ranges.) This will give you an idea of what you payment will be for the next year. You re-certify each year, or earlier if your income goes down and you need a lower payment. Some might lead to forgiveness of the balance after x number of years. They're very affordable.



Message 4 of 6
Valued Member

Re: National Student Loan Program versus Department of Education. What's the dif?

Thank you Sabii, exactly the answer I was looking for. 


FICO 8 Scores
10/16/19 (Start of rebuild):
Next Moves
1. Nurture NFCU relationship and improve credit mix with share secure loan
2. Lower Quicksilver utilization from 99% to under 30%
3. Become an authorized user on partner's best account
4. Apply for second NFCU card once Transunion reaches 620
5. Graduate Discover secured card
6. Bring student loans out of default in 2020

Signature last updated 10/20/19
Message 5 of 6
Community Leader
Valued Contributor

Re: National Student Loan Program versus Department of Education. What's the dif?

Message 6 of 6
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