Sallie Mae problems!

[Gettingitright22]

I have a student loan account with Sallie Mae that was opened in 2005 and I can only see a report till 2007 which is where it lists two 120 late payments for Jan and feb 2007 then nothing reported after that, I paid them a good chunk of money after deployment in 2008 and then thought it was paid off, turns out it is not (conflicting/bad info from them) and last year they took my entire tax return. On my USAA credit monitoring it says my account is "current". I am so confused and I want to apply for a mortgage within the next 10 months or so, what can I do? Is this a huge problem???

[Rikku]

First off, thank you for your service. I'm sorry you are in this situation after believing that you paid off the loan. From the info that you have provided, it sounds like you defaulted on the loan in 2007 - then in 2008, you made a large payment that you believed would settle the loan. Then nothing happened until your 2012 tax return was garnished, correct? And nothing since - no wage garnishment or collection calls? I assume that this was a federal student loan.

First off, have you called Sallie Mae? If they no longer own your loan, you can look it up in the national student loan database (the name may be slightly different, but it's a Dept of Ed website). The database should include all of your federal student loans, their current status, and the current lender that services the loan). If the status is default, your tax returns will be garnished until the debt is paid). I would contact the current lender or the Dept of Ed directly and ask about rehabilitating the loan. Perhaps someone else will chime in with their experience - I'm actually not sure whether rehabbing a loan will stop garnishment, but it will definitely help your credit, so that's what you want to do if you can!

As for the question of whether the defaulted loan will be a problem when applying for a mortgage, it is a major derogatory, so my guess is yes. I would try to rehab it - though you may have to push back the home-buying plans by a few months, since rehab takes nine months, plus whatever time it takes to update your CR.

[Gettingitright22]

Thank you! I called Sallie Mae right after the tax return was garnished and asked them to please send me all my account info and then we could set up a plan but they never got back to me, I have heard nothing despite my efforts to set something up. I am going to check that website right now, when I made the large payment they told me my loan was paid off.

[Gettingitright22]

Ok, just looked on the website and it says I need a pin, I requested a duplicate pin and my info is not in their system at all. What a headache!

[Rikku]

Hmmm, it's possible that the garnishment covered the remaining balance of the loan, but I would want confirmation. Are you sure that the tax return garnishment was for the student loan rather than another debt? Are you sure that it was a federal student loan, or was it a private loan through Sallie Mae?

This is a strange situation and I'm not sure of the ins and outs of wage/tax garnishment - you could try posting your question on the rebuilding board, as there are people there who have experience with this kind of thing (though perhaps in relation to other types of debt rather than SLs). If it is definitely a federal loan and the Dept of Ed is garnishing your tax returns, I would try calling them. They should be able to look up your info if it is indeed a federal loan. If they have no record of it, it could be a private loan - but I suspect that it's a federal SL since your return was garnished. Alternatively, you can call Sallie Mae again for the status. Do you have an account number? Sallie Mae has a pretty good website - if you can access your account, you may have an easy answer.