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Perkins Loan showed up from 14 years ago

New Member

Perkins Loan showed up from 14 years ago

The other day Igot an Experian notification that there was an Educational Loan opened in 2004 in the amount of $2,000. It had no history listed except a Positive, paid as agreed payment for the month of January 2018. Freaked out (because I did not believe I had any loans outstanding, I reached out to Experian...who said that they showed NO missed payments on my file. They did have 1 late payment showing for this new Educational Loan ... but couldn't see where it was. They said that it must be a glitch in their system.

So I give the College a try...they say that they had just 'cleaned out their files' and found a Federal Perkins Loan in my name that they submit over to the Dept of Education in December. So I called the Dept of Education who told me that they DO in fact show a Perkins Loan received just last month...that defaulted in 2007.

Yesterday I received a letter from Dept of Education saying that they now had my loan and I had 60 days to pay it in full (amount 3k now with interest) or consolidate or rehab. I have the means to pay in full, but if I do this, will I have a paid default on my credit report? The DOFD is 2007. If so, would rehabbing be the better option? If I rehab, will it then start reporting as a default for 9 months until I’m done with rehab?

I'm confused on WHY something just popped up on my credit report (but as a positive closed account with 1 payment as agreed). Also the number showing as the contact number for the trade line is a cell phone number that goes straight to voicemail.
Message 1 of 3
Community Leader
Legendary Contributor

Re: Perkins Loan showed up from 14 years ago

The confusion apparently resulted in it not showing earlier.  There should be no confusion that, once any prior error was corrected, it would now report.  Credit reporting of federal student loan derogs is mandatory under the Higher Education Act.


It is requried reporting if in default, and the normal exclusion provisions of the FCRA dont apply to unpaid federal student loan derogs.


If you pay in full, the normal exclusion provisions of FCRA 605(a) and (b) will then apply, and the derogs will become excluded.


Message 2 of 3
Established Contributor

Re: Perkins Loan showed up from 14 years ago

Perkins report for life, thats Federal money straight from Uncle Sam.  As a Federally guaranteed loan, basically if you default the government reimburses the school (who is the lender in this case), then the Dept of Education is on the hook to get it back.


Staffords (subsidized) follow the 7 year rule because they are usually issued through private lenders on behalf of the Federal Government and are not directly funded by the Feds.  The feds only pay the interest while you are in school.  Defaulting on these results only in the lender being on the hook to collect, the Federal Government is only out whatever interest it paid.  However they may come after you as paragraph below for that interest.


As with any government debt, there is no statute of limitations on collecting, and you can be sued past the seven year mark, and THAT judgement can be reported.  Its just like the IRS obtaining a Tax Warrant.  Additionally, the Dept of Education can and will lien all of your property, levy your bank accounts, and intercept your tax returns.  So while a Stafford will fall off your report like any other private loan, its a special case as like the Perkins loan it doesnt actually go away.  It will also prevent you from getting an FHA mortgage loan or any other federal grant or benefit. (CAIVRS)   Unlike other loans that default and then fall off your report, because the Government has a vested interest, the lender can also continue collection activities, even if they are no longer eligible for reporting.  Garnishment, levies, and the usual letters and the like will never stop even when your credit reports recover.


Unsubsidized Staffords follow the seven year rule, period, as they are essentially just private student loans, and the debt is technically private debt, the government didnt pay anything.



In the garden since 01/24/18 = Last FICO Update: 06/07/18 = EX 663 = TU 667 = EQ 723 = Steven Seagal of the Garden Club
Message 3 of 3