Old student loan Charged off, transferred. Collections not reporting it

[Anonymous]

I defaulted on a federal student loan about 10 years ago. Back then the Department of Education reported it. Soon after that I rehabbed the loan by making the agreed 10 monthly payments. The loan was back in good standing but then I eventually defaulted the loan again. OUCH! So the loan was again sent to collections with FEDLOAN servicing it. As time went by I had a couple of IRS refund offsets. FEDLOAN eventually charged it off and transferred it to so many new collection agencies that I couldn't keep up. DOE no longer reports it on my credit report but I know that I still owe them. I was just contacted by the latest servicer and they are willing to settle with me. I want to start my journey of buying a home and I know I can't have this hanging over me. It's not even that much but I'm scared of what paying off this debt that's not reported on my credit report will do to my score. The collection agency/servicer told me that they don't report to the bureaus but the Department of Education may do so. The only mention of this debt in my credit report is the closed ($0) charge off/transferred from FEDLOAN, which isn't good but it is the only bad stain on my credit. I don't know what DOE will report this eventual paid debt as when I pay it. Will this create a new entry from DOE or will they just change the status of the FEDLOAN Charge Off to paid in full? And what will any of this do to my credit score? I tried to contact DOE but they just referred me back to the same collection agency/servicer handling it. The collection agency told me they didn't know what DOE will do once I paid it off. Can I expect DOE to add a brand new negative entry that will hammer my credit score? Has anyone else ever been in this situation? Any ideas of what will happen next?

[zerofire]

Considering that the government will outlive you by at least several life times I would recommend finding a solution for paying the amount off. What the DoE reports does not matter right now as they are only concerned about recovering taxpayer money. If a amicable agreement is reached they are actually the most likely lender on this planet to a. Not report negative info and b. Offer to delete parts or all of the old negative info. Do yourself a favor and pay it off and then worry about what the report says since this is the only lender that has no benifit to drag you through the mud.

[Anonymous]

As zerofire said, those Federal loans will always be with you. They can decide to collect on them at any time, they can garnish your wages, and take money out of your bank account. When you collect social security, they can take some of this as well. If you can settle it, I would do so.

As far as how it reports, as a settlement might report as not having been paid in full. I think some will even negotiate the wording of how they report it (get it in writing though). However, you mentioned the worry is because you're thinking of buying a house. There will check the NSLDS and the loan will be there so you're not avoiding then knowing by not paying.
It's best just to take care of it. Good luck and congrats on being able to get it behind you.