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Options after 2 fed loan rehabs and a consolidation

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Regular Contributor

Options after 2 fed loan rehabs and a consolidation

I will admit that I'm confused about my loans. I have multiple loans (from each semester). They are somehow under 2 main accounts with 2 different creditors. I rehabbed the big one last year. It's now in forebearance. There's a smaller one that is being garnished from my wages.

 

I'm in the process of trying to stop the garnishment. One or all of these loans are on my credit report. That's the main reason that I want the rehab. I know that after x payments, they delete it from your file. I've done a rehab years before this. IIRC, there's a policy about not being able to rehab the same loan more than once unless you consolidate. Again, I'm lost and confused. Any idea what my options are? I'll still call ED, but just wanted to get your input, especially since I probably can't reach them til Monday.

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Senior Contributor

Re: Options after 2 fed loan rehabs and a consolidation

If I'm understanding this correctly:  
* Your big loan is rehabbed and currently under forebearance

* Your smaller loan is defaulted, however you have already rehabbed this one?

You cannot rehab a loan a second time unless your first rehab occurred before 2009.  
You have two options to get those loans out of default other than rehab if I undestood correctly:  1. pay it in full 2.  consolidation.
If you consolidate, you will be put under an income contingent plan - if you make 3 voluntary payments, you can choose from the various repayment plans.

 

Just for clarification, if you rehabilitate a defaulted loan, the record of the default will be removed from your credit history, but your credit history will still show late payments that were reported before the loan went into default.   Some servicers will delete the late payment history, but this is not mandated/required.   Rehab is generally the better option, because it will also preserve the age of the account & history.
If you consolidate, the record of the default (as well as late payments reported before the loan went into default) will stay on your report.

 

You mention your forebearance - have you contacted your servicer to set up income based payment plans?   Your repayment could be as low as $0, and would count towards forgiveness.


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Regular Contributor

Re: Options after 2 fed loan rehabs and a consolidation

Thanks for all of the info! I didn't contact them about the payment plans bc I figured it would be too high. I've done the calculations before. Just did them again. From what I understand, it doesn't take into account the loans that are already being garnished. I'll still contact them to discuss my options. I'll see if I can consolidate. Thanks again!

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