Rehabbed Direct Loans/Perkins Question

[DukeCityRehabber]

Hello,

I am in a bit of a pickle.  I completed my rehab about 5 months ago and have been waiting to be picked up by a lender. I'm getting desperate.  I was timing my rehab to coincide with going back to grad school.  After a year of preparation, I was admitted into a top-10 program!  Here's when reality hit.  While my application process for school went along as scheduled, my loan rehabilitation has not been completed.

The school I was admitted to requires a sizeable tuition installment prior to my actual financial aid package kicking in sometime in October.  So I need a private loan for the tuition installment due at the end of this month.  But no one will touch me with the defaults looming large on my reports and bringing down my scores. 

Here are my questions:

1.  My loans are direct loans and a perkins loan.  I read somewhere these are picked back up by the original lenders (Department of Ed).  If so, why would I be waiting for a lender to pick up my loans?  Shouldn't the DoE just start servicing them?  If thats the case, who can I contact to make this happen? 

2.  I also read on myeddebt.com that once I complete 6 consecutive payments, I am eligible again for federal loans.  My rehab  payments count toward this, no? 

3.  I applied for a Sallie Mae private loan, but I think I was turned down ONLY because of the default status of my loans.  If I dispute my default status and get proof from DoE that I am current and in repayment, will that clear the hurdle for Sallie Mae? 

Any help or ideas are much appreciated. 

[InvincibleSummer3]

---

@DukeCityRehabber wrote:

Hello,

I am in a bit of a pickle.  I completed my rehab about 5 months ago and have been waiting to be picked up by a lender. I'm getting desperate.  I was timing my rehab to coincide with going back to grad school.  After a year of preparation, I was admitted into a top-10 program!  Here's when reality hit.  While my application process for school went along as scheduled, my loan rehabilitation has not been completed.

The school I was admitted to requires a sizeable tuition installment prior to my actual financial aid package kicking in sometime in October.  So I need a private loan for the tuition installment due at the end of this month.  But no one will touch me with the defaults looming large on my reports and bringing down my scores. 

Here are my questions:

1.  My loans are direct loans and a perkins loan.  I read somewhere these are picked back up by the original lenders (Department of Ed).  If so, why would I be waiting for a lender to pick up my loans?  Shouldn't the DoE just start servicing them?  If thats the case, who can I contact to make this happen? 

2.  I also read on myeddebt.com that once I complete 6 consecutive payments, I am eligible again for federal loans.  My rehab  payments count toward this, no? 

3.  I applied for a Sallie Mae private loan, but I think I was turned down ONLY because of the default status of my loans.  If I dispute my default status and get proof from DoE that I am current and in repayment, will that clear the hurdle for Sallie Mae? 

Any help or ideas are much appreciated. 

---

1) Perkins loans will go back to the school. Direct Loans will be picked up by a new lender. Who did you rehab through? I would be on them like white on rice right now. 5 months is waaaay too long. Or call the Default Resolution Group. I would call every single day until this is handled.

2) True. But if you've completed nine payments in rehab, so this is a moot point. Or should be. When you log into NSLDS, does it say you're eligible for federal loans? (It should, if they've updated after the 6th payment.)

3) When you say dispute, I'm hoping you mean disputing with the lender and not the CRAs. The direct dispute will be the first step.

[kjel]

+1

Also, when I spoke with the Dept. of Ed to get a letter saying that I had successfully completed rehabilitation the rep asked if I was returning to school and needed financial aid. Apparently there is some kind of letter then can issue as well as update the system that you are eligible again.

I contacted the Default Resolution Group over the phone. The number is below.

Phone: 800-621-3115
TDD: 877-825-9923
E-mail: drghelp@ed.gov
Web site: https://www.myeddebt.com/borrower/
Office Hours: 8:00 a.m. - 10:00 p.m. (ET), Monday through Friday. 8:00 a.m. - 7:00 p.m. (ET), Saturday.

[DukeCityRehabber]

---

@InvincibleSummer3 wrote:

---

@DukeCityRehabber wrote:

Hello,

I am in a bit of a pickle.  I completed my rehab about 5 months ago and have been waiting to be picked up by a lender. I'm getting desperate.  I was timing my rehab to coincide with going back to grad school.  After a year of preparation, I was admitted into a top-10 program!  Here's when reality hit.  While my application process for school went along as scheduled, my loan rehabilitation has not been completed.

The school I was admitted to requires a sizeable tuition installment prior to my actual financial aid package kicking in sometime in October.  So I need a private loan for the tuition installment due at the end of this month.  But no one will touch me with the defaults looming large on my reports and bringing down my scores. 

Here are my questions:

1.  My loans are direct loans and a perkins loan.  I read somewhere these are picked back up by the original lenders (Department of Ed).  If so, why would I be waiting for a lender to pick up my loans?  Shouldn't the DoE just start servicing them?  If thats the case, who can I contact to make this happen? 

2.  I also read on myeddebt.com that once I complete 6 consecutive payments, I am eligible again for federal loans.  My rehab  payments count toward this, no? 

3.  I applied for a Sallie Mae private loan, but I think I was turned down ONLY because of the default status of my loans.  If I dispute my default status and get proof from DoE that I am current and in repayment, will that clear the hurdle for Sallie Mae? 

Any help or ideas are much appreciated. 

---

1) Perkins loans will go back to the school. Direct Loans will be picked up by a new lender. Who did you rehab through? I would be on them like white on rice right now. 5 months is waaaay too long. Or call the Default Resolution Group. I would call every single day until this is handled.

2) True. But if you've completed nine payments in rehab, so this is a moot point. Or should be. When you log into NSLDS, does it say you're eligible for federal loans? (It should, if they've updated after the 6th payment.)

3) When you say dispute, I'm hoping you mean disputing with the lender and not the CRAs. The direct dispute will be the first step.

---

[DukeCityRehabber]

---

@DukeCityRehabber wrote:

---

@InvincibleSummer3 wrote:

---

@DukeCityRehabber wrote:

Hello,

I am in a bit of a pickle.  I completed my rehab about 5 months ago and have been waiting to be picked up by a lender. I'm getting desperate.  I was timing my rehab to coincide with going back to grad school.  After a year of preparation, I was admitted into a top-10 program!  Here's when reality hit.  While my application process for school went along as scheduled, my loan rehabilitation has not been completed.

The school I was admitted to requires a sizeable tuition installment prior to my actual financial aid package kicking in sometime in October.  So I need a private loan for the tuition installment due at the end of this month.  But no one will touch me with the defaults looming large on my reports and bringing down my scores. 

Here are my questions:

1.  My loans are direct loans and a perkins loan.  I read somewhere these are picked back up by the original lenders (Department of Ed).  If so, why would I be waiting for a lender to pick up my loans?  Shouldn't the DoE just start servicing them?  If thats the case, who can I contact to make this happen? 

2.  I also read on myeddebt.com that once I complete 6 consecutive payments, I am eligible again for federal loans.  My rehab  payments count toward this, no? 

3.  I applied for a Sallie Mae private loan, but I think I was turned down ONLY because of the default status of my loans.  If I dispute my default status and get proof from DoE that I am current and in repayment, will that clear the hurdle for Sallie Mae? 

Any help or ideas are much appreciated. 

---

1) Perkins loans will go back to the school. Direct Loans will be picked up by a new lender. Who did you rehab through? I would be on them like white on rice right now. 5 months is waaaay too long. Or call the Default Resolution Group. I would call every single day until this is handled.

2) True. But if you've completed nine payments in rehab, so this is a moot point. Or should be. When you log into NSLDS, does it say you're eligible for federal loans? (It should, if they've updated after the 6th payment.)

3) When you say dispute, I'm hoping you mean disputing with the lender and not the CRAs. The direct dispute will be the first step.

---

---

Whoops, I don't know what happened with my reply.  Thank you for your responses.  As to your questions:

1.  If the Perkins loans go back to the school, can I call up my university and get the ball rolling with them?  I rehabbed through ERS.  I have called them a bunch of times, and all they say is that everything is ready in the system and that the DoE has to go in and take back the loans.  I've called the Default Resolution Group and will keep calling now. 

2.  When I log into NSLDS, it shows all of my loans as still defaulted.  I don't see any section regarding eligibility for federal student loans.  Curiously, my status up at the top of the screen shows me as "WITHDRAWN AS OF MAY 15, 2006".  This makes no sense, as I have my degree from that institution. 

3.  When reading the Sallie Mae loan documentation on their site, it discusses disputing or requesting a review of my application if anything was wrong.  I was hoping to dispute their findings with a letter from DoE saying I've completed rehabilitation.  Who are you saying I should dispute?  Which lender? 

Thanks again for your replies.  I need all the guidance I can get with this process. 

[InvincibleSummer3]

---

@DukeCityRehabber wrote:

---

Whoops, I don't know what happened with my reply.  Thank you for your responses.  As to your questions:

1.  If the Perkins loans go back to the school, can I call up my university and get the ball rolling with them?  I rehabbed through ERS.  I have called them a bunch of times, and all they say is that everything is ready in the system and that the DoE has to go in and take back the loans.  I've called the Default Resolution Group and will keep calling now. 

2.  When I log into NSLDS, it shows all of my loans as still defaulted.  I don't see any section regarding eligibility for federal student loans.  Curiously, my status up at the top of the screen shows me as "WITHDRAWN AS OF MAY 15, 2006".  This makes no sense, as I have my degree from that institution. 

3.  When reading the Sallie Mae loan documentation on their site, it discusses disputing or requesting a review of my application if anything was wrong.  I was hoping to dispute their findings with a letter from DoE saying I've completed rehabilitation.  Who are you saying I should dispute?  Which lender? 

Thanks again for your replies.  I need all the guidance I can get with this process. 

---

1) I did, in my case. The last loan I had to rehab was a Perkins, and I paid the last payment 3/15 and then there was zero movement. So frustrating. I used to work at the University I graduated from, so I called up the school and asked if there was anything I could do. I can now make payments to the servicer, but still haven't seen an update to my credit report.

2) I have the same "withdrawn" notation! I thought maybe it was just me. Scary, since I have photos from graduation and everything. I can't explain it, but I too show as withdrawn and graduated. There should be a notation that says "defaulted, six consecutive payments" though. Is there? At a minimum, you should have that.

This is what I would do: get in touch with ERS, and ask to speak to a supervisor. They are seriously behind, and finger-pointing at other agencies is a cop-out. Call every day if you must. Also get in touch with DRG. Daily, if necessary. If you don't get movement on the situation by the end of one week, get in touch with the Ombudsman. Seriously. This monkey business has gone on long enough, and you followed through on your end of the deal. Time for them to follow through on theirs.

I hate to see anyone go with a private student loan if at all possible, but the Sallie Mae folks might be okay with a letter from DoE. 

[DukeCityRehabber]

OK, here's my daily progress...

I called into the default resolution group.  First person I talked to told me that I had a "rehabilitation exception" notated on my account since the last time I called in.  I never heard about that before.  He explained that it meant that they were going to go in and remove the defaults from my credit report, but it would take 30 to 60 days to show up.  Has anyone heard of this "rehabilitation exception"?  Is he just blowing smoke?  Also, he said that if I called back with my school's fax number, they'd fax them a Title IV eligibility form. 

I then called right back after about 2-3 minutes and spoke to someone else.  She had a slightly different story.  She said that regardless, the bureaus wouldn't be changed until my loan got picked up by a lender, but that she had marked my account to be completed for rehab and I should get a letter within 2-4 weeks from my new lender. Also, she told me that the Perkins loan may take way longer since it had to be taken back by the university. 

I asked each of them about what takes 30-60 days for the credit bureau to update. Does it take DoE that long to get the letter out?  Or does it take the bureaus that long to update the system?  If its the credit bureaus holding everything up, that would be grand, since I could just do a rapid rescore to get my updates processed in a few days.  If its the DoE that takes forever, I wonder if I can get that sped up? 

Its frustrating because each person I speak to has slightly different versions of where my account is.  I'm thinking of emailing the ombudsman tomorrow. First, I'm going to give it a day and speak to ERS to see if they have funding dates showing on their end. 

[InvincibleSummer3]

I have not heard of a reb exception, but that doesn't mean it isn't true. Did they give you a reason why these haven't been picked up by a lender yet?

[DukeCityRehabber]

The person from the Default Resolution Group said that ERS hadn't updated their system to indicate that I completed rehabilitation and THAT was the reason for delay.  When I called ERS and DRG on 4/29, apparently ERS put the right message in the system.  ERS said that they shouldn't need a note in the system. Someone dropped the ball here, I suspect.

I'm going to call tomorrow to get more detail about the default and withdraw information in NSLDS website.  The DRG person said I shouldn't call my university, but I think I'll do it anyway tomorrow to check on the Perkins progress. 

[InvincibleSummer3]

Let us know how it goes. My Perkins situation is dragging way out....Im curious to hear if that's normal or not.