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OLD Defaulted loans. Rehab them? Pay them off?

New Visitor

OLD Defaulted loans. Rehab them? Pay them off?

Went to refi this past weekend and was alerted to EIGHT defaulted SLs on my credit report that have not shown up on my reports in many years. Loans are from 1989 through 1994. All show a date reported as 6/24/2012. All show Date of First Deliquency of 1/2006. NONE show any payment history. Under the Comments sections of each TL is says "Student loand permantly assigned to government, Collections" (varies slightly between CR agencies)


I can pay these off immediately, or I can rehab them if I think that they'd look better after rehabbing, getting them current, then paying them off.


The re-fi, of course won't happen if I decide to rehab the SLs but that's not a big deal. I was just going for a better rate.


Original loan servicer was Sallie Mae, but I think that they are WAY out of the picture. Currently all show on my CR as USDOE. The CA is Diversified Collection Services.


CA is willing to shave off all the CA fees and intereset for the past year for a one-time payment of about $100 less than what I currently owe on the loans.




Message 1 of 4
Regular Contributor

Re: OLD Defaulted loans. Rehab them? Pay them off?

For me, it would depend on what the rest of my credit looked like. You'll take a hit either way:


  • Settle/pay off, and they'll drop sometime around 7/2013
  • Rehab takes nine months, and finalize that around 7/2013. Then you could pay off and have good looking tradelines through 2016. (10 years)

Message 2 of 4
New Visitor

Re: OLD Defaulted loans. Rehab them? Pay them off?

(I had to create a new account. I didn't note my password and now the account recovery is asking for my SSN which I never gave. I don't think so!)


It's not that bad. On a recent car loan (prior to the SLs showing up in 6/2012) I was at 751 median.


I decided to just pay it. I negotiated a principal only payoff which shaved all the interest since 2006 and CA fees, and frankly after reading 35 pages of the Loan Rehabilitation thread started by Ficotron, I have no interest in dealing with two years of hassle and checking my reports and calling and emailing and calling who-knows-who to get items removed from my record. That's a tough row to hoe and I respect those that have the patience and time. I don't.


So, what triggered this was a refi. I'll have to wait about 90 days (max) for the DOE to report back to the agencies. My scores as of yesterday were:


653 - median credit score

610 = equifax

653 = experian

685 = transunion


I'll try to remember to post back here in January or whenever I attempt the refi again what my scores turned out to be in my situation, once the payoff of the loans updates on my CRs.


Student loans... ugh. I'd hate to be signing my name on the dotted line at today's tuition rates.


Best of luck to all.

Message 3 of 4
New Contributor

Re: OLD Defaulted loans. Rehab them? Pay them off?

Bumping for an update.


I'm considering paying off my SL, too, and will be applying for a mortgage soon, so this is pertinent to my situation. Please let us know whether/when you decide to refi.



TU 759, EX 744, EQ 779
Current Focus: Gardening indefinitely
Goals: 800 Club, pay off auto loan in 2 years
Message 4 of 4